 |
Buying a home is exciting and stressful. You may be tempted to rush the home buying process and sign any contract presented to you. But it’s essential that you understand any legal document before signing.
Learn more about the difference between a REALTORS® client and a customer, the pros and cons of the BRA, and whether or not signing the buyer agreement is mandatory.
What Is a Buyer’s Representation Agreement (BRA)?
The Buyer’s Representation Agreement (BRA) is a legal written contract between you as the buyer and your REALTORS®. This important document outlines the services that your REALTORS® will provide and your obligations, including:
The agent’s duties and obligations to the buyer Agency relationships The scope of the agent’s duties
Buyer responsibilities
Things to Know About the BRA
“ Before you sign a contract, it’s essential to understand the terms.”
Customer vs Client
Signing a buyer representation agreement makes you a client of the real estate brokerage, which grants you certain rights. REALTORS® have a fiduciary duty to act in their client’s best interests; however, those obligations do not extend to customers.
As a client, your entitled duties include:
Loyalty Your best interests are protected and must take priority over the interests of the brokerage, agent, and any other party
Disclosure – Your REALTORS® must tell you everything they know about the property and the transaction that could have an impact on your decisions
Confidentiality – The brokerage cannot share your personal information with anyone outside the brokerage without your permission. This includes your reason for buying or selling and your budget
Avoiding conflict of interests
Your REALTORS® must avoid any situation that would cause a conflict of interest, including the agent representing you and another potential buyer or the seller of the property
“If you’d prefer to remain a customer, the level of service you receive will differ. For example, your REALTORS® must be honest, act with professionalism and integrity, and ensure any information they provide is accurate. However, they are not obligated to keep your information confidential or look out for your best interests. ,”
Exclusive vs. Non-exclusive
There are two types of buyer agency agreements: exclusive and non-exclusive. An exclusive BRA legally obligates you to work with that REALTORS® unless you cancel the contract or it expires.
Non-exclusive agreements are less common. However, they provide the same rights and obligations as an exclusive BRA, except that you, as the buyer, may work with multiple REALTORS®.
Moreover, only the real estate agent who found the property will be compensated, as the seller pays the commission.
Brokerage Representation Agreement vs. Designated Representation Agreement
There are two types of representation agreements in Ontario. Signing a brokerage representation agreement gives you representation by the brokerage and all its agents, who must work in your best interests. However, one agent may be your primary contact. With a designated representation agreement, one (or more) real estate agent is your designated representative and must protect your interests. Whereas other agents who work for the brokerage are required to treat you impartially.
Pros and Cons of a Buyer’s Representation Agreement
Pros:
Legal protection – The REALTORS® is legally obligated to work in your best interests Clarity – The contract lays out precisely what you can expect from your REALTORS® and what they require from you
Confidentiality – The contract protects your personal information Negotiable – You can customize many of the terms in the BRA
Brokerage Representation Agreement vs. Designated Representation Agreement
There are two types of representation agreements in Ontario. Signing a brokerage representation agreement gives you representation by the brokerage and all its agents, who must work in your best interests. However, one agent may be your primary contact. With a designated representation agreement, one (or more) real estate agent is your designated representative and must protect your interests. Whereas other agents who work for the brokerage are required to treat you impartially.
Pros and Cons of a Buyer’s Representation Agreement
Pros:
Legal protection – The REALTORS® is legally obligated to work in your best interests Clarity – The contract lays out precisely what you can expect from your REALTORS® and what they require from you
Confidentiality – The contract protects your personal information Negotiable – You can customize many of the terms in the BRA
Cons:
Difficult to cancel – Depending on the termination clause in your agreement, it may be difficult to cancel your BRA if you are unhappy with your agent
Exclusivity – Often, you will not be able to work with any other REALTORS® until the contract ends
Do You Have to Sign a Buyer’s Representation Agreement?
You may be wondering “is a buyer representation agreement required?” The Buyer’s Representation Agreement may vary by province. Some REALTORS® may ask you to sign a BRA before they show you any homes, while others may wait until you’re ready to put an offer in on a property. While not legally required, signing a buyer representation agreement alters the real estate agent’s obligations as described previously.
Keep in mind that the details of the BRA are negotiable, so be sure to request adjustments as needed. For more information, contact your province’s real estate council or association.
How Long Does a Buyer Representation Agreement Last?
There is no standard length of a BRA contract. The length of the contract is negotiable, and the agreement should specify a start date and an expiration date. However, you may be able to cancel the agreement before the expiration date. Additionally, the contract does not obligate you to buy a home.
What is a Holdover Clause?
A holdover clause sets the amount of time in the holdover period, usually between 30 to 90 days. Suppose you purchase a home during the holdover period previously shown to you by the agent in your initial BRA contract period. In that case, you may have to pay the brokerage commission.
Cancelling the Buyer Representation Agreement
If you are unhappy with your REALTORS®, you may be able to cancel your contract, depending on the terms of the buyer representation agreement. There are several ways to end a BRA, for example:
Mutual consent If both parties agree to end the contract, it may be terminated in writing.
Contact the Broker – If the REALTORS® does not agree to end the contract, you can contact the agent’s broker to cancel the agreement or change to a different real estate agent within the brokerage.
Contact the Real Estate Council If both the agent and broker refuse to cancel the contract, contact your province’s real estate council and file a complaint.
Wait it out – Lastly, you can wait until the contract expires and find a new REALTORS®t.
Should You Sign a Buyer Representation Agreement?
While a buyer representation agreement has pros and cons, it may be in your best interest to sign one if you are working with a REALTORS®.
In short, the BRA ensures that your REALTORS® will work in your best interests and clearly lays out what your REALTORS® expects from you.
On the other hand, it usually locks you into working with that specific agent.
Remember, many of the terms in the contract are negotiable, so make sure you understand everything in the document before you sign on the dotted line.
No comments: