Have you recently decided to start searching for a home? If so, you may have come across the term buyer representation agreement. Or, are you currently in the research phase of selling your property? You’ve likely heard something about listing agreements. If this is your first real estate purchase or sale, you may be slightly wary of signing a contract with a single agent. Knowing the specifics of each agreement can help you take this step with confidence.

If you’re buying or selling a home, here’s what you should know about buyer representation and listing agreements…

Buyer Representation Agreements

In the simplest terms, a buyer representation agreement is a document that establishes a professional relationship between a home buyer and an agent. It lays out the services that your real estate representative will provide, along with any specific expectations they may have of you.

Having everything in writing is in everyone’s best interest, but it’s important to make sure you understand what you’re reading. These agreements are often written in a formal manner (since they’re legally-binding contracts), and there’s no shame in asking for clarification. In fact, it could save you a lot of grief! You may also choose to consult a lawyer, which you can do at any time.

Signing a buyer’s representation agreement isn’t mandatory when buying a home. Some agents may be comfortable working without one, though their responsibilities to you will differ if they do. You’ll want to ask about this to make sure you understand the difference.

There are a couple of things to consider. The first is who your brokerage is serving. If they’re representing both you and the seller, you should ensure that you understand what that means. Ask questions, and make certain that you’re comfortable with the situation. If not, don’t enter into an agreement.

You should also understand holdover clauses. Every buyer representation agreement is active for a specific period. A holdover clause states that if your purchase occurs within a certain number of days after the agreement expires, your agent is still entitled to commission for the work they’ve put in. If you have more specific questions about these clauses, your lawyer is the best person to ask.

Listing Agreements

A listing agreement works much like a buyer representation agreement. It’s a document that outlines your relationship with the seller’s agent you choose. It allows them to market and sell your home and describes the services they’ll provide for you. Having it in writing is best for all parties.

As is the case with a buyer representation agreement, it’s important to clarify anything you may not understand in your listing agreement. Make sure you know which services you’ll be receiving as well as the fees involved. Your agent can explain the different clauses and what they mean. That said, consulting your lawyer if you have any legal questions will prove helpful.

Lastly, be sure you know how the holdover clause works. If your listing agreement expires, you’re no longer bound to its terms. Having said that, if you sell your home to a buyer that was introduced to you by your agent, they may still be entitled to commission. This is only the case for a specific number of days after your agreement expires, a number that will be set out in your contract.

Things to Consider

Buyers and sellers should be aware that, when it comes to working with a real estate agent, few things are set in stone. From the date that your agreement starts and expires to the commission your agent walks away with, there’s no outside body governing the specifics of your transaction.

Of course, once you find an agent who seems like a good fit, your best bet is to find terms that work on both sides. Most real estate professionals approach clients with their own ideas of what’s fair, and they’re usually based on extensive experience. The key is to be flexible—and if you really can’t come to an agreement with one agent, there are others out there!

Ready to start your buying or selling journey with a local agent? Get in touch to find out if we’ll be a good match!