Real estate transactions are about dreams and houses, but before any of that begins, it’s all about paperwork. A smart offer that protects your interests while winning the home you love is in the details.
However, to get there in the first place, you’ll need a Buyer Representation Agreement to secure the services of a real estate agent. What does this mean, and what are your obligations and benefits under this contract? Here is everything you need to understand before signing a Buyer Representation Agreement (BRA).
Do you want a seamless and straightforward home-buying process? One of our detailed buying guides will help!
You Become a Client, Not a Customer
Under the latest version of the Trust in Real Estate Services Act, everyone who signs a BRA is a client, not a customer. This is a critical change, as it entails a higher level of service and protection for anyone serious about a home purchase.
As a client, your Realtor®, and the entire brokerage, are all under a fiduciary duty to promote your best interests. While this has always been best practice as far as we are concerned, it is now the law.
It’s important to remember that there is no standard set of services as dictated by the Real Estate Council of Ontario (RECO). Every brokerage is free to offer their own packages. Nevertheless, there are minimum standards all agents must abide by province-wide.
- The agent and the brokerage must represent you and protect your interests, which take priority over their own.
- You are entitled to full disclosure of everything you need to know about the transaction or any potential conflicts of interest.
- The agent and brokerage will safeguard all confidential information.
Finding the right location is the foundation of a smart home purchase. Should you choose Guelph? The posts below will give you food for thought:
- Guelph Vs Toronto: Is It Time to Move?
- How to Find an Up & Coming Neighbourhood in Guelph
- Why We Love Downtown Guelph
Your Responsibilities as a Home Buyer
As a client, it’s your responsibility to help your agent help you. This means being as clear as possible about what you want and don’t want in a property, and what might affect your buying decision, such as a zoning by-law that inhibits your intended use of the house.
Review the terms and conditions of the agreement carefully, and be sure to ask about anything you don’t quite understand, preferably before signing the agreement.
For the best outcome, it’s also advisable to respond to any questions your agent has honestly and quickly.
Lastly, you are committing to pay any applicable fees to the brokerage as agreed. That said, it’s almost always the seller who pays the commissions; typically, the buyer does not owe anything out of pocket.
Your Realtor® Needs the Agreement to Assist You
Once you approach a real estate agent (and before you sign a Buyer Representation Agreement), they will provide you with the RECO Information Guide. This document provides information that will help you make informed choices about working with a brokerage and the types of representation agreements available.
Like any legal agreement, the BRA is designed to protect all parties by clearly describing the terms, the duration, and the responsibilities involved. However, the real estate agent needs your signature to be able to offer any guidance.
Section 10 of the Code of Ethics in TRESA actively forbids real estate agents from providing services, advice, or even an opinion to a self-represented party. If you have a question on the quality of a particular house you’re considering, want to book a showing, or determine if the price is fair for the market, an agent needs a BRA to proceed any further.
The only time an agent is permitted to assist you without a contract is when it’s in service to their client, usually on the other side of the transaction. In other words, if a listing agent is representing the seller, they can give you information about a house – as long as it serves the best interests of the homeowner who wants nothing more than to earn the highest price possible. This likely goes directly against your goal of getting great value from your purchase.
The listing agent is also obligated to inform their client, the seller, about anything they discover about your motivation for buying, when you need the house, and the maximum you are willing to pay. If the seller has a Realtor® by their side, you also want representation (unless you are extremely knowledgeable and skilled in negotiation, and possibly even then. Buying a house is an emotional experience!)
What If You Change Your Mind About Buying a House?
What happens if you sign a Buyer Representation Agreement, then life changes and you decide not to proceed? There’s an important clarification here. Although a BRA is legally binding, you are only compelled to buy if you put an offer on a house and the seller accepts.
Until then, your only obligation is that if you choose to buy a house while the agreement is still valid, you must work with that real estate brokerage as outlined in the contract. If you do not put in an offer during that time period, the contract will simply expire and then you are free to move on.
Note: many real estate contracts include a holdover clause. This simply states that an agent is entitled to payment if you buy a house they showed you within a certain time period (typically 30 days) after the expiry date. This clause exists to protect the agent and ensure they receive compensation for services they provide.
Clauses on a Buyer Representation Agreement
Before signing a Buyer Representation Agreement, be sure that it covers everything you and your Realtor® discuss. That said, all contracts must have the following clauses clearly stated:
- The duration: When the contract begins, when it ends, and the holdover period, if applicable
- Remuneration: The exact percentage, whether it is to be paid by the buyer or the seller, and how any commission gaps are handled
- Services provided: The exact duties and services your agent and the brokerage will provide
Looking for more details before beginning your home search? The posts below will make a more informed buyer:
- Title Insurance in Canada: What It Is, Why It Matters & How We’ve Got You Covered
- How Much Does It Cost to Buy a House
- Checklist for Buying a Home
Why GoWylde Real Estate Is the Right Choice
Like Listing Agreements, Buyer Representation Agreements are legally binding, and you must have a valid reason should you wish to back out of a contract. Alternatively, you could ask for a mutual release if the partnership is not working out as intended.
However, you never need to worry about being locked in with GoWylde Real Estate. We believe outstanding results and a commitment to exceptional service should speak for themselves.
As such, all of our agreements come with a cancellation clause. If you are not satisfied for any reason, just let us know. We will work together to fix it, or else you are free to move on. This is yet another advantage that allows you to move forward with confidence in your search for your next home.
Do you have more questions about the process of buying a house? Our top Guelph real estate agents are here to guide you every step of the way. Reach out to info@gowylde.ca or call 519-826-7109 to learn more.
