Buyer Representative Agreement
When you begin the process of buying a home you may enlist the services of a real estate agent to help you in the search for a home and to help you negotiate a purchase price. If you decide to work with a real estate agent you normally have to sign a buyer representative agreement. This agreement serves as a contract that specifies the details of your professional arrangement with your agent.
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Commission
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When you buy a home your real estate agent receives a commission that the seller of the home normally pays from the sale proceeds. Generally, real estate agent's commissions amount to 6 percent of the sale price of a home. The seller's agent and the buyer's agent normally split the commission equally. When you sign a representative buyer's agreement you formally recruit an agent to work on your behalf, and by signing the contract you enable your agent to receive a commission as part of the real estate transaction. Without a valid contract, the agent would have no legal grounds to make a demand for payment.
Duration
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Depending on where you live, how quickly you need to find a home and how particular you are, it could take days, weeks, months or even years for you to find a home and agree to purchase it. Therefore, you cannot sign an open-ended buyer's agreement because if you did so then an agent could claim a fee if you bought a home years after you had stopped actively working with that agent. A buyer's agreement must have an end date after which your agent has no legal basis for claiming a sales commission.
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Details
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State laws on real estate transactions vary, but in many states you can sue a real estate agent for issues that emerge as a result of a real estate transaction. You must prove that the agent lied or misled you, but to prevent buyers from making frivolous claims years down the line, many buyer's agreements include a clause that limits the time within which you can sue your agent.
Depending on your state's contract law you can sometimes include a clause that allows either you or the agent to terminate the relationship at any time. In some states you can also hire multiple agents, in which case the contract includes a clause that details the splitting of commissions.
Considerations
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In addition to the standard legal elements of a buyer's agreement you can also include details such as what kind of properties the agent should help to identify and how often the agent should arrange to view properties. Many agents have generic buyer's agreements that you can sign, but if you want to make an agreement that includes very specific details then you should ask an attorney to draw it up to ensure that the agreement complies with your state's laws. Additionally, some contracts include the buyer paying a fee to cover the agent's expenses, but this fee does not replace the sales commission.
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