If you're embarking on your home-buying journey and want a buyer agent to help navigate the process, you must sign a written buyer agency agreement.
Massachusetts exclusive buyer agents only represent home buyers and work at real estate brokerages that only represent home buyers. These agents do not practice dual agency or designated buyer agency. Consumers need to know whether their buyer agent only represents them.
A written buyer agency agreement is a formal contract between you and your chosen real estate professional. The buyer broker agreement outlines your agent's specific services and their compensation. The agreement provides a clear framework for the professional relationship between you and your agent, ensuring that expectations are understood upfront.
The new requirement to sign a buyer agent agreement is part of broader changes within the real estate industry, specifically related to real estate broker commissions. The National Association of Realtors (NAR) agreed to practice modifications to settle litigation. For some states, this is a brand-new requirement, while others have had similar agreements in place for years. For example, New Hampshire has required a contract between home buyers and their real estate agents for many years.
The main advantages of these agreements are clarity and transparency. You and your agent can avoid misunderstandings by spelling out your real estate professional's services and compensation. You also can avoid unexpected costs. You'll know from the beginning what to expect from your agent, and the terms of their compensation and who will pay it will be clearly defined.
Buyer agency agreements between consumers and their real estate agents have always been negotiable. In fact, your contract now must include a conspicuous statement that real estate agent fees and commissions are entirely negotiable and not set by law. You have the right to discuss and modify aspects of the agreement to suit your needs. These aspects include the services you expect, the length of the contract, and the compensation. The compensation must be clearly stated and cannot be open-ended or a range. It could be a flat fee, a percentage, or an hourly rate—whatever you and your agent agree on. Consumers should consider various factors when choosing their buyer agent. For example, what is their educational and work background, experience in real estate, and whether they engage in dual or designated agency?
You must sign a written buyer agency agreement before you tour any homes with your real estate agent, whether in person or virtually. You do not need to sign a contract if you're visiting an open house or asking general questions about an agent's services; however, there are pitfalls to attending an open house without a buyer agent representing you.
While you are responsible for paying your agent based on the terms of the agreement, you can negotiate with the seller to help pay your buyer agent's commission. A home seller might agree to what's referred to as a buyer credit or seller concession for closing costs. That would free up your cash to pay your buyer agent. In many cases, the seller will agree to pay your buyer's commission for you. An experienced buyer agent focused less on their commission and more on your best interests will draft an offer and negotiate a deal to minimize your financial burden.
The type of business relationship you have with your real estate agent is up to you. The written buyer broker agreement does not mandate any specific type of relationship, and you can choose the best arrangement for you as long as it complies with state laws. Massachusetts, New Hampshire, and Rhode Island allow dual agency, so be sure that your real estate buyer agent is 100 percent loyal to you 100 percent of the time.
You and your agent can mutually agree to change the terms of the agreement at any time. Additionally, written buyer agreements often include provisions that allow you to exit the contracts under certain conditions. Be sure to review these conditions with your agent and ensure that you fully understand them before signing. Consumers may want a buyer agency agreement that allows them to cancel at any time by written notice.
Written buyer agency agreements should protect you and your buyer broker by establishing clear expectations and terms upfront. A contract with your buyer agent should provide more transparency and protection.
Buyer agency agreements should reduce the risk of misunderstandings, help you confidently navigate the home-buying process, and give you a stronger sense of control over your relationship with your buyer agent and the home-buying process.