A buyer’s agreement clearly defines how you’ll work with an agent.
If you’re thinking of buying a new home, chances are you’re planning to find an agent (known as a buyer’s agent). According to Zillow Research, about 88% of home buyers use an agent to help them find, negotiate for, and win their home.
Buyer’s agents provide expert guidance and advocacy through one of the most complex and important financial transactions you’ll ever make. As a home buyer, you’ll likely benefit from having an experienced professional represent your interests only — not the seller’s — in the search and transaction. (Most sellers, in turn, work with a listing agent to represent their side of the deal.)
Soon, there will be new standards in place for how agents interact with consumers, including a requirement for buyers to sign a legal agreement with a buyer’s agent that lays out the terms of the relationship — broadly called a buyer agreement. There are different forms of these agreements that you may sign throughout your home-shopping journey. Here’s what to know about the key types of them.
What is a touring agreement?
Let’s say you’re early in your home-shopping journey. A touring agreement or limited services agreement may be used to specify that you and the agent will work together for a very specific purpose and brief period of time — during the home tour. This gives you the important opportunity to get to know an agent before you commit to an ongoing buyer’s agreement.
Zillow offers agents state-specific agreements that cover touring activities only and expire seven days after signing. These agreements do not require a fee, and will not bind you to work with any agent in the purchase of a home. When you do choose an agent to work with in your purchase, you should sign a new buyer agreement with them specifying the terms and compensation for their services.
What are exclusive and non-exclusive buyer agreements?
Once you are serious about purchasing a home and ready to hire an agent to represent you, you should consider signing a buyer agreement* with an agent to cover additional brokerage services.
These buyer agreements typically establish an “agency” relationship between you and your agent — meaning, the agent is bound to advise and advocate on your behalf during the duration of your agreement. This means the buyer’s agent represents solely you — not the seller — in the transaction.
These agreements are often exclusive, which means that you will not hire another agent to represent you while you shop for a home.
Alternatively, a non-exclusive buyer agreement does not lock you into a long-term commitment with an agent, or it allows you to work with more than one agent. You might decide to work with two or more agents if you’re searching for homes in two different cities. In this case, you and your agents would sign non-exclusive agreements, unless otherwise required in your state.
What to understand before you sign an exclusive buyer agreement
Before signing an exclusive buyer agreement, do your research. You should not agree to an exclusive agreement until you are comfortable that the agent is the right fit. Your agent will be your partner and advisor for one of the most important purchases of your life.
Buyer agreements should spell out:
- Duration of the agreement: Specifies the time frame the contract covers, providing both parties with a clear understanding of the length of their commitment. Generally includes a termination clause that gives both you and your agent the ability to walk away from the agreement under specified conditions, or the agreement terminates automatically at the end of a specified period.
- Agent responsibilities: Lays out the duties of the real estate agent, such as searching for properties that fit the buyer’s criteria, arranging showings, and assisting with the negotiation process.
- Compensation: Clearly lays out the amount of compensation and how the agent will be paid. It’s important to understand that this is negotiable, and not set by law. Common arrangements could involve the agent receiving a percentage of the purchase price, or a flat fee agreed upon by all parties. In some limited buyer agreements — as in Zillow’s Touring Agreement — it specifically notes there is no compensation for the touring services provided.
- Buyer commitments: Spells out what is expected from the buyer, such as working exclusively with the agent and providing prompt feedback on property listings and visits.
Remember: You have the right to negotiate with your agent on every aspect of your buyer agreement — including compensation.
What are the advantages of signing a buyer’s agreement?
It protects your interests
Once your agent signs a buyer’s agency agreement, the agent has a legal obligation to prioritize your interests, not the seller’s, giving you peace of mind and simplifying a stressful and complex process.
It provides for personalized service
Under the terms of your agreement, you’ll receive personalized service tailored to your specific real estate needs. Your agent will spend time understanding your requirements and preferences to find your ideal home. They’ll also handle the legwork, from scouting listings to coordinating showings, reducing the stress associated with the home buying process.
It sets clear expectations
Buyer agreements clarify the responsibilities and expectations of both the agent and the buyer, minimizing misunderstandings and helping you feel more confident in your eventual success.
A buyer agreement is much more than just a formality; it’s a foundation for a successful working relationship between you and your real estate agent. If you’re preparing to venture into the real estate market, consider the buyer agreement as a powerful tool in your toolkit to help you get the best outcome: a new home you love.
Learn more about your rights in the real estate transaction and what Zillow is doing to advocate on behalf of renters, buyers and sellers.
*Agreement requirements vary by state. Ask your agent for information.