For a soon-to-be homeowner, the buying process can be one of the biggest and most time-consuming decisions in a lifetime. It’s full of ups and downs, property walkthroughs, and paperwork that never seems to end.

Some homebuyers will only have to go through this process once. Others only a handful of times in life. A realtor goes through the home-buying process an average of 30 times per year.

This involves a whole lot of work on their end. To protect themselves, they may ask you to sign an extra document.

Enter the buyer agency agreement. So what is it and how does it affect your home-buying process?

Here’s everything you need to know about signing an exclusivity agreement with an agent.

What Is an Exclusivity Agreement?

Signing a buyer agency agreement means that you will work exclusively with the broker agency and a realtor of your choosing. It’s a signed contract that states you are not able to work with another agency.

This realtor should always be the one to show you properties, communicate with listing agents, and write purchase offers.

A broker and agent agreement ensure that commision gets rewarded for any home you buy. This includes new builds, For Sale By Owners, or purchasing a home from a family member or friend.

Why Is A Contract Needed?

Acting on good faith alone is not always enough to protect the rights of a realtor. A good realtor works hard to find you properties and should receive a commission when they help find your dream home. If a buyer ends up writing a contract with a different realtor, then the original realtor loses their commission.

In the buyer’s defense, they often don’t know that a realtor relationship should be exclusive. Some buyers work with a realtor for months or years then end up signing an offer with another realtor.

First-time home buyers are often the most unaware of this. Yet, it is the agent’s job to inform the buyers of how the realtor broker relationships work.

A contract puts everything out in the open and in writing. It also informs the buyer of the exclusive relationship and its terms.

What to Expect from Buyer Agency Agreements

The contract will have set terms that the buyer and agent will need to meet. This may be for a period of a few months, or a few years. This information gets found on the first page of the contract.

An exclusive buyer agency agreement will bind you together for this set amount of time. Both parties are then expected to fill their duties.

The agent’s job is to find you properties, send you requested information, overlook paperwork, and make purchase offers. They are also expected to show you properties of interest and attend walkthroughs. They should help you understand things to look for when buying a home.

The buyer’s job is to respect the contract terms and work only with the agreed upon broker and agent. They are also responsible for reading and signing documents. The buyer should also pre-qualify for the needed loan amount.

The contract will also outline the agent’s commission fee. It’s most common for the seller to the pay the brokerage fee and it is negotiable. If you ignore the contract terms and sign with another broker, you may find yourself owning the agent compensation.

The property description and price range will also get listed on the contract. If you are in agreement to buy a single property, this is the only type of property you are in contract with the realtor. You are free to buy a condo or apartment building with another realtor if you choose.

Other Things to Consider Before Signing

Finding the right buyer’s agent is not always easy. It involves good research and recommendations.

Conduct Research and Accept Recommendations

Industry websites, local Google searches, and personal recommendations all come into play. Open houses are also a great way to meet potential realtors in your area. Once you select a realtor, it’s the buyer’s job to ensure they are the right fit.

It’s important to first spend time with the realtor before agreeing to be exclusive. Both the buyer and the realtor should feel comfortable entering the agreement. Any realtor red flags mean you should not sign into an exclusive contract with a real estate agent.

Review the Contract Terms

Most buyer agency agreements have at least a 3-month window for working together. Be sure to discuss the terms up front, and request to negotiate if needed.

You’ll also want to make sure the property description, price range, and area are correct. This protects the buyer if they are also looking for a second property in another location. This is especially important for buyers who plan to flip houses or own rental properties.

When the Contract is No Longer Valid

If you change your mind about the price or location that is set in the contract, then it is subject to becoming void.

If the relationship between the buyer and agent turns sour, you can ask to work with another agent. Buyer agency agreements are between you and the broker, not the agent.

You can also ask for a guarantee to get written in the contract. This allows you to break the agreement if the relationship is not working out.

So, Should You Sign on the Dotted Line?

An exclusivity agreement is essentially extra paperwork that outlines what the buyer and agent should be doing. It takes good faith a step further by stating set terms and conditions.

The contract works to protect both the buyer and the agent through the entire buying process. So, it is something worth considering if the agent requests it.

It may also be a one-time thing, to help establish a new home buyer and agent’s relationship. Should the buyer be ready to resell their home in the future, the contract may not come up again.

The most important factor in the home buying process is selecting a realtor that you trust. They should also have an excellent reputation in the community. This will make the whole process smooth, efficient, and pleasant.

Here’s more on the full step-by-step guide for buying your dream home.