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Understanding Buyers Brokerage Agreements in Alberta
Buyer Brokerage Agreements have been around for several years, and have only been mandated for the last decade. This legal change created security for both consumers and REALTORS® in Edmonton and throughout Alberta. This form states the responsibilities of both the buyer and their real estate agent including:
- The mandated fiduciary duties, to protect the interests of the buyer
- The buyer cannot hire more than one broker or real estate agent to represent them
- The term of the agreement. Depends on how long the real estate agent chooses to work with a buyer, this agreement is normally 30 Days to 1 year and allows enough time for the buyer to purchase a home. If the buyer has not purchased a home during the time frame, they may extend the agreement or sign with another agent. (The time frame is negotiable)
- The retainer fee (normally $1000 - $2500) is held in trust by the real estate agent/broker and forms part of the buyers down payment. This means the amount of your retainer will be used as part of your downpayment. However, if you do not purchase within the specified time range, your retainer will default to the real estate office trust account.
- Remuneration is stated in the agreement and can not be changed without written consent from all parties once agreed upon. This protects the agents' commissions and allows the buyer to know how much the REALTOR® receives for their services. (usually paid for by the sellers)
- While under the agreement, If the buyer elects to purchase a property without the help of their real estate agent, they will owe the agency the commission set out as per their Buyers Brokerage Agreement.
This agreement also lays out the obligations and duties of the real estate agent ensuring the agency is working in the buyers best interest. Some of these obligations may include:
- Showing you all properties you may be interested in as soon as possible
- The duration of the agreement
- Advertising for properties that meet your search criteria (paid for by the buyers agent)
- Pulling land titles certificates to ensure closing capacity
- Setting you up on Auto-prospecting.
- Fiduciary Duties of the real estate agent
- Explaining and helping to prepare writing offers to purchase
- Negotiate favourable terms for the buyer
- Provide a Buyers CMA to ensure you are not overpaying
- Inform you of all aspects of your offers including any counters
- Assist you with a chose of mortgage brokers, inspectors, lawyers, etc
- Any other relevant services you may require
Summary:
Basically, a buyers brokerage agreement allows the REALTORS® to work in the best interest of the buyer and disclosure ALL KNOWN information on both the property and the seller. Under a customer status, this is not the case.
Note:
When buying a new build - use a REALTOR®, not the salesperson working at the show home. Who do you think they are really representing?
For more information on working under a Buyers Brokerage Agreement, feel free to contact us.
