What is a Buyers Agency Agreement?
Hi!
As you may or may not be aware, some changes have happened in real estate in the last month and a half. I'd like to help you navigate these changes and answer any questions that you may have.
What's Happened?
As of July 1st, 2024, in the state of Indiana, you have to have a buyers agency agreement signed in order to view any homes. All licensed real estate brokers in Indiana must follow this requirement – this includes REALTORS® and non-REALTORS®. You can learn more about the passed bill HERE.
As of August 17th, 2024, this has gone into effect nation wide.
The other item that has happened now nation wide (but did happen on July 1st in Indiana), is that an offer of compensation from a seller to a buyers agent will no longer be able to be viewed online through the MLS It will not show on any website and cannot be listed in any remarks (both public & private) through the MLS or any related service. (more on this below).
What is a Buyers Agency Agreement?
A buyers agency agreement is an agreement between a BROKERAGE (who the REALTOR works with) and a BUYER outlining the terms of our working relationship to buy real estate. You can also learn about it a little more from the NAR (National Association of Realtors website HERE.
When do I have to sign a Buyers Agency Agreement?
This document must be signed before viewing any properties per the new rules. This is stated through NAR (The National Association of Realtors). You can read more about the changes HERE
What does the agreement say?
The buyers agency agreement outlines several items.
The services that BROKER has to do in order to help a buyer in the process of buying a home including, but not limited to locate a property, negotiate price, terms and conditions acceptable to a buyer and that the BROKER should act in the best interest of the BUYER throughout the process.
The buyer's responsibilities in entering into a buyers agency agreement (you cannot enter into more than one at once)
Term length: How long the contract will be active, usually 3–12 months (Although this can be negotiable)
Termination rights: How the working relationship can be ended, including grounds for termination and how it should occur
Compensation & Fees: How the buyers agent will get paid through the process and the amount of their fees.
What does this mean for YOU, as a buyer?
Well what this all means is that in order to view properties, your REALTOR will be asking you to sign a buyers agency agreement. This agreement indicates the term of your relationship with them, your responsibilities through the contract and theirs… and it also sets compensation. Now what does this mean in terms of writing offers since compensation is no longer offered by sellers through the MLS?
Well, when writing an offer to a seller we include a form entitled “Addendum to Purchase Agreement Buyer Request for Seller to Pay Buyer Broker Compensation.” This form asks the seller to pay the buyers agent compensation as part of their offer. Ideally we enter in whatever amount is agreed upon in the buyers agency agreement, present to the seller, and the seller agrees to the terms of the buyers agency agreement. If they do not, then several things can happen, but it all starts with a conversation between your REALTOR and YOU as a buyer.
What happens if the sellers offer of compensation to a Buyers Agent and my Buyers Agency Agreement don't match up?
This is something that can happen in the process of negotiating the terms of the contract to purchase a home. So if it does, your REALTOR will have a conversation with you. In no particular order, the following can happen:
The BROKER and BUYER agree that the fee originally agreed upon in the agency agreement is acceptable and the difference in the amounts being offered will be paid for by the buyer to the BROKER at closing (through the closing statement).
The BROKER and BUYER agree to adjust the fee in the buyers agency agreement to reflect the amount of compensation being offered by the seller.
The BROKER and BUYER agree to adjust the fee to a different amount than being offered by the seller and the buyer makes up the difference to their REALTOR
Now, as mentioned before, this all begins with a conversation, so while the conversations may be hard, it's always best to be open and honest throughout the process.
Have Questions, Concerns, Thoughts?
If you have any questions, thoughts or concerns, don't hesitate to call, text or email me and I'd be happy to help!
As for working with me, don't ever hesitate to ask me questions. If you choose to work with me in the process of buying a home, I promise to continue as I always have, which is have open, honest conversations and work with you to accomplish your real estate goals. It's an honor to be able to help others accomplish their real estate goals and I look forward to continuing this in the years to come!
Cheers -
Nicole
