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You’ve found a great real estate professional to help you find and buy a property – Congratulations! But before you get started, take some time to thoroughly review your service agreement.
A service agreement, also known as a buyer’s agency agreement, is a legally binding contract between you and the real estate brokerage that your professional is licensed with. When you sign a buyer’s agency agreement, you agree to work exclusively with that brokerage for a specified length of time so that they can help you find a property in a specific region of the province. Once you are their client, your real estate professional will have a legal duty to act in your best interest.
Before you sign, it is important to review all the terms of the buyer’s agency agreement and ask questions about anything that isn’t clear. The real estate professional can explain the terms of the contract. If there is anything that you’re unsure about, it is a good idea to get legal advice before signing the contract.
What’s in a Buyer’s Agency Agreement?
The agreement should specify the date the contract takes effect and the expiry date. Other important pieces of information you will find in the buyer’s agency agreement include:
- The commission that you agree to pay to the real estate professional’s brokerage should the amount your professional charges not be provided by the listing brokerage;
- The circumstances in which you agree to pay the commission;
- The market areas in BC that are covered by the agency agreement; and
- What happens if either you or the brokerage wants to end the agreement before the expiry date.
Don’t Get Taken by Surprise
Did you write an offer on a property that was accepted and then not completed? Even if you don’t complete on a deal, it is possible (although rare) that you could be required to pay the real estate professional the agreed-upon commission. Some buyer’s agency agreements can stipulate that buyers must pay the commission once a legally enforceable contract has been entered into, and in some cases even after the contract expires.
There have also been cases where a buyer has been required to pay the commission, although they were not able to complete the transaction and the deal collapsed.
Commissions are not set or approved by BCFSA. They can vary by brokerage and are part of the contractual agreement between you and the brokerage.
Negotiate if Necessary
If you’re not comfortable with the terms of the service agreement, you can usually negotiate on many of the provisions. There may be consequences to changing specific terms and your real estate professional will be able to explain those to you.
Taking the time for a thorough review of your service agreement is the best way to ensure that you understand all your professional’s obligations to you, as well as the obligations that the contract imposes on you. Remember: the contract binds ALL the parties who sign it, not just the real estate professional!