January 29, 2020

PropertyShark Feature | Buyer's Broker Agreements

When looking for the perfect property or home to buy, real estate brokers can be quite helpful. These brokers use their agency resources to help clients find exactly what they are looking for.


In these cases, a buyer’s broker agreement is signed by the broker and the buyer to detail their arrangement, which includes the broker’s duties and obligations to the buyer. Depending on the buyer’s needs, these types of agreements can be either non-exclusive or ​exclusive right-to-represent​ contracts:

  • A ​non-exclusive right-to-represent contract gives a buyer more options. For example, the buyer is allowed to hire more than one agency or broker, and can buy a property through another agent/broker as long as it’s not the same property shown by a different broker. In this situation, the broker does not have to be paid, but the agency will require compensation for its time and efforts; additionally, the seller is responsible for the broker’s fees. Meanwhile, the buyer’s agent – not the broker – enters the picture when the buyer needs help finding a home on their own, although the seller is still responsible for the agent’s commission. While a seller’s agent may have an agreement in place with the seller, once a buyer is represented by a broker, the commission to the seller’s agent will be split. This type of contract can be beneficial to buyers because increased competition will motivate brokers to find them the perfect home or property.
  • An ​exclusive right-to-represent is differentiated by the buyer’s obligation to the broker. Specifically, the buyer may not hire another broker to work for them or terminate their contract without permissible cause prior to the end of the term of the agreement. The contract may also state who is responsible for paying the broker/agent and whether that is in the form of an agreed-upon sum payment or percentage. This may not always be beneficial to the buyer because the buyer (or the seller, depending on the terms of the agreement) is responsible for paying a commission no matter whether the property was introduced by the broker.

In some instances, because the seller’s agents know that they have to split commission with another broker, they may be inclined to sell the house to someone who will pay a lower purchase price but who is not represented; this way, the seller’s agent will get their entire commission (by gaining another client) instead of just half.

Depending on the reputation of certain agencies, individual brokers or the buyer’s specific circumstances, it may be beneficial to explore the different types of broker representations to ensure the best agreement possible.

Published on PropertyShark

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