I am not a lawyer nor do I play one on TV but I will take a few minutes to discuss the Buyer’s Brokerage Agreement. First of all, the state law in Georgia prohibits a Broker from representing a buyer as a client without first entering into a wrtitten agreement with the buyer. The key word here is “client”. A Realtor can only work with a buyer in two ways – as a ‘client’ or as a ‘customer’. There are significant differences between the two.
When a Realtor works with a buyer as a “customer”, they are limited to performing what are called “ministerial acts”. For example, an agent can identify property for sale, show the buyer the property, provide pre-printed real estate contracts, complete the forms at the direction of the buyer, and assist the buyer in completing the purchase process. The Realtor, however, can not provide any advice in purchasing a home, make any recommendations or offer counsel in any way. The Realtor-Customer relationship is very difficult for all but the most savvy buyers because the Realtor can not offer any advice at all.
In most cases, the Realtor works with the buyer as a “client” which means that they can not only provide the above services but make recommendations, suggestions and offer advice. The buyer is still required to do their own due dillengence meaning that they have to get the home inspected, make the best choice of a lender and check out the neighborhood and surrounding areas however, the Realtor is not limited in the amount of information they can provide.
When a buyer chooses to work with a Realtor as a “client” they are required to sign a Buyer Brokerage Agreement. The roles and responsibilities for the agent and the buyer are laid out in this agreement. The agent is responsible for finding the buyer an acceptable property and working within all of the state laws and guidelines to assist the buyer in purchasing this property. The buyer is required to do seven things once this agreement is signed:
- To work exclusively with this Realtor throughout the contract term. The buyer can terminate this agreement but must do so in writing.
- To be available to see properties
- To respond to all communication in a timely manner
- To provide the agent with accurate financial information
- To inspect the property and become familiar with surrounding areas
- To become familiar with the Purchase and Sale agreement and all other documents which they are required to sign.
In Part V of Navigating the Maze, I will discuss the other issues in the Buyer Brokerage Agreement and make sure that you are aware of the right questions to ask your agent.