What is a Buyer’s Representation Agreement Anyway?

Posted by on November 6, 2019 in Buying, Market, Realtors | 0 comments

What is a Buyer’s Representation Agreement Anyway?



You are in the market for a house. You find a Realtor. They are a family friend, or a referral from a friend, or you found them on the internet. You meet with them and they ask you to sign a contract to represent you. Wait, you haven’t even found a house. What is a Buyer’s Representation Agreement anyway? What does it mean, and should you sign it?

First let’s look at the different types of Buyer representation agreements. (Disclaimer: This is for the State of Tennessee. You will want to check with your state to find out what types they use.) There are two main types with two sub-types. There are Exclusive and Non-Exclusive as well as Buyer Agency and Designated Agency.

  1. Exclusive Buyer’s Representation Agreement: This is an agreement that says the agent or company is the only agent or company that has the right to represent the buyer in a residential real estate transaction.
  2. Non-exclusive Buyer’s Representation Agreement: This agreement allows a Buyer to hire more than one agent or company to represent them in a residential real estate transaction.
  3. Buyer Agency: Under this type of Buyer’s Representation Agreement, the entire real estate company technically represent the Buyer.
  4. Designated Agency: This type of Buyer’s Representation Agreement will designate one agent in a company to represent the Buyer.

Why would you sign them?

  1. Exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: A Buyer has one agent or one company working for them. Some buyers may think they will get more results if they hire more than one agent. In my experience, agents/companies tend to work harder for the buyers that are working with them exclusively. This type of agreement obligates both parties to each other which typically forms a loyalty from day one and will cause an agent/company to put every effort into finding the perfect property for the buyer, knowing that if/when they do, they will get paid.
  2. Non-exclusive Buyer’s Representation Agreement – Buyer Agency/Designated Agency: Some investors decide that this is the best agreement to sign because agents/companies may have access to different off-market properties. This may be true for some, however, my opinion is that a buyer will typically get the best service if the agent/company knows they have their client’s loyalty.

Should you sign it?

In the state of Tennessee, in order for an agent/company to work for you, there must be a written agreement, so, yes, you should sign it. However, the fact that you sign it, doesn’t mean you are stuck if the agent/company does not perform their duties. Either party may terminate the agreement. If you don’t feel you are receiving the best service, speak to the agent/company. If you can’t come to a solution to rectify the situation, ask to be released from the agreement. WARNING: If you have signed a Buyer’s Representation Agreement that is still valid, DO NOT sign another one with another agent/company. A Buyer agrees to make sure the agent/company gets paid. If you disregard the agreement and work with another agent/company, you can be held liable for a commission to the other agent/company even if they did not represent you in the real estate transaction.

In a nutshell, these agreements are good. They protect the consumer and the agent/company. They allow a Buyer to be represented in a real estate transaction. Most consumers don’t know enough about the real estate process to represent themselves well so it’s best to leave it to the professionals.

About Michelle Froedge
Michelle Froedge is a residential Realtor and Principal Broker in the Greater Nashville and Williamson County areas of Tennessee. “Mom” to four-legged fur baby, Tyler, Auntie to Zelamie, she is a vegetarian and sings in her spare time. Michelle has lived in Nashville and Franklin since 1997 and has been selling homes since 2004.


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