Everyone expects to sign a contract when choosing a listing agent to help them sell their home. They understand that the agent needs to be protected as they spend out-of-pocket, upfront costs for marketing and other expenses. But often homebuyers are surprised when their buyer’s agent presents them with an exclusivity contract before taking them out to see homes. What is it, and should you sign it?
This first question is, why would a buyer’s agent want to have a contract with a homebuyer anyway? The answer is simple; unlike other professions, real estate agents are paid only when a transaction is closed through a commission. All costs, including time and gas, are paid upfront. This means that they are taking time to show you homes and negotiate on your behalf, all without the certainty that they will be paid.
While an exclusivity agreement does not guarantee the client will find a home, make an offer, and close escrow, it does ensure that the buyer will not decide to use their cousin or neighbor at the last minute after the agent has done all the work. The agreement will last for a period of time, generally 6 months, and provides protection for the agent, and is legally binding. So, what if you sign an agreement and then are unhappy with the service provided? The cancellation provisions are typically spelled out in the contract so make sure you read them and request any revisions prior to signing.
Buyer agent exclusivity agreements are quite common. If you are being presented with one, read it carefully, understand the obligations, and then if you feel comfortable, move forward, and find your next home.