Buying a Home is a process that requires effort, time, skill, and the proper resources. The most important asset to a home-buyer is a qualified and competent buyer’s agent. If you’re ready to embark on the home-buying journey, it’s important to understand the role of a buyer’s agent in the transaction. Especially with the new NAR laws in California, understanding the benefit of an Exclusive Buyer Broker Agreement is essential. A buyer’s agent is a licensed real estate agent, who provides the expert guidance and advocacy that is essential to ensure a successful real estate transaction. As a home buyer, having an exclusive agent representative dedicated to your best interests will present invaluable benefits.
What’ll Be Covered In This Article:
- Buyer’s Agent Role With The New NAR Laws
- What is a Buyer Agency Agreement?
- Non-Exclusive vs Exclusive Buyer-Broker Agreement In CA:
- Buyer’s Agent Compensation
- The Benefits of an Exclusive Buyer Agency Agreement
Buyer’s Agents & The New NAR Laws
In July 2024, The National Association of Realtors passed new laws regarding Buyer’s agent compensation in CA. The purpose of the new law is transparency around representation + compensation on the buyer side of the transaction. Under the new laws, before a buyer goes out and tours a property, the buyer must decide to be unrepresented or represented. If the buyer elects to have representation, the buyer needs to sign a buyer agency form electing for the representation to be exclusive (Exclusive buyer-broker agreement), non-exclusive, or specific to some named properties. Importantly, the buyer needs to sign and agree to the compensation their agent will get paid for the representation.
So How Does This All Work?
What is a Buyer Agency Agreement?
A Buyer Broker agreement, (also known as a buyer agency agreement or a buyer representation agreement) is a contract that establishes an agency relationship between the agent and the buyer. This creates a binding relationship for both the agent and the client. The Buyer-Broker Agreement outlines the obligations of both principals- the agent and the buyer. The contract outlines and delineates:
- The Agent’s Duties
- The Term Length Of The Contract
- The Possibility Of Dual Agency
- The Offer Of Compensation
Non-Exclusive vs Exclusive Buyer-Broker Agreement In CA:
Under an Exclusive Buyer Broker agreement, the buyer agrees that the agent will be the exclusive representing party in the purchase of their future home. Under an Exclusive Buyer-Broker Agreement, the buyer is designating their agent as their sole representative, and cannot bypass the agent to go to another agent or directly to the listing agent.
A Non-Exclusive Buyer Broker agreement, on the other hand, allows the buyer to use other agents to find him a potential home. A non-exclusive agreement does not provide the same benefits to the buyer as an exclusive agency agreement, because it lacks the commitment on behalf of a buyer.
Why Should a CA Buyer Sign an Exclusive Buyer Agency Agreement?
In California, signing an exclusive buyer-broker agreement significantly benefits potential home-buyers.
The Exclusive Buyer-broker agreement protects your interests by obligating the agent to prioritize your interests over any other party in the transaction. The Buyer Agency agreement also establishes a secure relationship between the agent and buyer. With a mutual commitment of the buyer and their agent, an agent can fully dedicate themselves to their client’s specific needs. The exclusive buyer-broker agreement also establishes clear expectations and responsibilities for both the buyer and the agent, fostering a transparent and professional relationship
Offer of Compensation:
There is a section of the buyer agency contract that defines how compensation is handled. In every real estate transaction compensation to the agents is based on a commission percentage of the home. The buyer, the seller, or both parties will pay this commission percentage upon closing, but most often the seller is the one paying.
Under the new NAR Laws, the Updated Residential Purchase Agreement has a paragraph at the end of the offer with a section for the buyer to fill in the amount of commission the buyer requests for the sellers to pay their agent. The amount of commission requested of the seller can be no higher than the amount of commission agreed to be paid on the buyer representation agreement. Most often, the seller pays the buyer’s agent commission, but signing the contract provides a commitment from the buyer to ensure that their agents receive the commission agreed upon.
The new laws are fantastic because they mandate truth + transparency in all dealings, with signatures in writing by all parties. As people who love iterating and getting things better, and full honesty and awareness by all parties always, we’re all here for the new way and we believe it will be easy to adapt and work with the new forms and laws!
Sheri
A Final Note About Exclusive Buyer Agency Agreements:
Signing a Buyer Agency Agreement in CA is a smart choice for any potential Home Buyer. Having a set commitment brings security to home buyers, knowing that they have an exclusive agent to address their specific needs as a personal advocate. With the new NAR laws in place, Buyer’s Agents are looking to secure their compensation before investing their time and efforts on behalf of a potential home buyer. Signing an Exclusive Buyer Broker Agreement establishes a secure commitment on behalf of both the buyer and agent and only serves a a benefit to both parties.
About The Bienstock Group:
The Bienstock Group, led by Sheri Bienstock, is an expert real estate group in Los Angeles, Hancock Park, and Miracle Mile. For almost 18 years, Sheri has helped people sell their homes for top dollar in the 90036 zip code and Hancock Park, and also purchase the home of their dreams. Sheri specializes in showcasing beautiful architectural homes in the Hancock Park area, securing top dollar for sellers. I take immense satisfaction in guiding sellers and buyers through the journey of selling their treasured home and finding their new home.
Whether you’re ready to sell a cherished property or embark on your homeownership adventure, Sheri provides expert guidance, a stress-free experience, and most importantly the most lucrative + successful end to the most important transaction in most people’s lives. Sheri is committed to her clients and will invest all her effort to get you the best results possible. Sheri has 235+ five-star reviews on Zillow, and has been ranked #1 listing agent in 90036 since 2009 and in Hancock Park since 2016.
