If you’re thinking about buying a home, there are a few ways to go about it.
Some people prefer to do it alone, calling the phone numbers of listing agents on the realtor.ca website and/or physical real estate signs on lawns. If you are strong-willed, have done multiple transactions, or just know what you want, then there are some benefits to this approach (especially in a hot market where the property you might be interested in might be listed and sold quickly).
The majority of people, however, go about it differently. They hire an agent first, then go home shopping with that agent representing them. This post is about the nature of that relationship.
Once you’ve decided that the most sensible approach for you is to have proper representation, here are a few more decisions to make:
- Who to hire? Do your research online and by asking friends. Why not call and interview a few agents to see what they offer/do differently? People do it when they sell their home, so why not now?
- The nature of the relationship? Different agents might offer different services. But what about commissions or how to end the agreement? What happens if you want to buy your friend’s home?
Let’s explore in more detail:
Who to Hire?
Well, we’re biased, but we do offer a pretty incredible service, and we know that a lot of what our buyer’s agents
’ do on a daily basis is over and above the industry standard. You can learn a little more here.
The Nature of The Relationship
It is the law that, at the earliest opportunity, your agent explains the fiduciary duties that apply when an agent in Alberta and a potential client strike up a professional relationship (for example, we must look after your best interests). There is a guide that we explain to you, written by the regulator, which covers these as well as explains the representation options and the choices you have when conflicts of interest
It is also required that, at the earliest opportunity (before too much of your confidential information changes hands), we discuss Buyer Representation Agreements with you and offer to sign one.
This is all to avoid confusion and so that consumers can be informed, so that your wishes are made known, and that a professional relationship is built to fit.
[box] What is a Buyer Representation Agreement?
These agreements are designed to protect the consumer by enshrining the nature of the relationship in a written service agreement. They became law in Alberta in 2014. It’s basically a service agreement. So that’s the first thing. Don’t freak out. :)[/box]
Like all contracts or agreements, there is almost infinite flexibility as to how these are put together. Just because we have to present you with options, doesn’t mean you have to sign one. You can look through and discuss (negotiate) terms with us, but ultimately, if you are not happy, you can hire our competition. With proper education, we have found that this almost never happens, however.
To give a sense of the ease and flexibility of these service agreements, here are some variables:
Term - The period covered. It could be as short as 1 day or last for months.
Exclusive/Non-Exclusive - You might sign an agreement that doesn’t even bind you to using only one agent.
Area - Maybe you can sign one agreement that covers a certain area (e.g. north of the bridge in Fort McMurray), and another that covers the wider region of Wood Buffalo.
Property type - Maybe you sign one agreement to buy a house and another agreement with another agent to buy a condo. You can specify the type of property you want to buy.
How It Ends - Perhaps it can be terminated by either party for any reason, or perhaps it requires both parties to sign? Can it be terminated for any reason at all?
Commissions - How are these to be handled? Do commissions ever come out of your pocket, or will they always be requested of the seller? What if you don’t buy: Is there payment or not? How will “For Sale By Owner” (FSBO) properties be handled?
Services included - You can agree on services above and beyond the industry standard to be included in the contract, binding the agent to perform those extra tasks.
Of course, with it being a contract, you can always have it reviewed by a legal professional.
The idea of the agreement is that it helps agents and clients have clarity regarding the nature of the relationship. It is a legally enforceable contract that gives the consumer the right to hold the agent more accountable for the quality and quantity of work they perform on behalf of the client.
Naturally, the best agents require some sort of buyer representation agreement to be signed (getting the very best service requires a tiny amount of commitment). When clients know up front about the quality of care that they will receive, we find they are more than happy to sign, especially after a thorough reading of the contract.
We make the service agreements as friendly as possible. For us, business is about trust. Our service contracts very much favour the buyer.
We welcome your questions so that we can discuss them in detail. Usually people’s concerns centre around commissions and termination, and about 99% of the time they are more than satisfied by our answers. So far this year, we have helped 62 people buy homes and we LOVE what we do.
So to answer your question: Yes, you should sign a buyer representation agreement, as long as you are fully informed and you are happy with the terms of it.