A Buyer Brokerage agreement or a Buyer Agency agreement according to Real Estate Wiki (www.RealEstateWiki.com) is much like the Listing agreement between a seller and a real estate broker and is signed between a home buyer and a broker represented by an agent.
Prior to 1990, under the common law of most states the broker only represented sellers and only in the last fifteen years or so states passed statute law to create the buyer’s agency. Under the buyer agency agreement, the real estate brokerage represented by the agent owes the buyer the duties of loyalty by acting in the buyer’s best interest, confidentiality by not disclosing information to the seller’s agent that could adversely affect the negotiation and assistance in negotiating the best price and terms for the property. In addition, the agent representing the buyer will conduct extensive research based on the buyer’s needs (i.e. price range, school district, number of bedrooms and baths, location, lot size, basement, etc.) and often preview the properties in order to provide the best service to the client. The agent’s extensive knowledge of the area and access to real estate information, including the local listing services adds great value and saves the buyer time and money in the search for the perfect home.
A buyer should know that by searching for a home independently, the buyer has no representation even if working through the listing agent. The listing agent only represents the seller’s best interest. If a listing agent is allowed by his/her brokerage firm to conduct business as a dual agent (that is, representing both the buyer and the seller), the agent is entitled to the full negotiated commission but not having a written agreement with the buyer is only required to represent the seller’s interests in the transaction. Therefore, it is in the buyer’s best interest to select a knowledgeable agent and sign a buyer agency agreement, in order to have personal representation and be led through the real estate purchase process from identifying the home to closing, including the offer and counteroffer writing while staying within the time limits set by the contract. In other words, allowing the agent to go to bat on their behalf.
When a buyer or seller has a written agreement with a brokerage firm, the party is legally considered to be a “client” of that firm, meaning that the agency has legal responsibilities to fulfill toward that client. If a buyer or seller does not have a written agreement with a brokerage firm, the party is legally considered to be a “customer” of that firm which means the agent or broker is not legally bound to look out for their best interest.
Like the listing agreement with sellers, the buyer agency agreement must have a starting and ending date as well as specify how the buyer's broker is to be paid (by the seller or by the buyer him or herself). In addition, it should define the duties and obligations of all parties. When a buyer has a signed agency agreement with a broker, it is the responsibility of the buyer to disclose this fact to any listing agent and it is the obligation of any listing agent to enquire from the prospective buyer whether he/she is being represented by a broker or agent.
