The Buyers Agency Agreement Explained
What is a Buyers Agency Agreement?
When a buyer embarks on the journey of purchasing a home or property, one of the key tools to help navigate this process is a Buyers Agency Agreement. In the realm of North Carolina real estate, a Buyers Agency Agreement serves as a crucial document that establishes a professional relationship between a buyer and a licensed real estate agent. This agreement outlines the agent’s commitment to provide dedicated and specialized services to the buyer, encompassing everything from conducting property searches to negotiating favorable terms and conditions.
For buyers in North Carolina, signing a Buyers Agency Agreement offers a sense of security and assurance. It not only emphasizes the agent’s responsibility to act in the best interest of the buyer but also provides a foundation for a trustworthy and productive association. This agreement marks the start of a professional engagement that will guide the buyer from the early stages of the home buying process until the successful closing of the transaction.
In the heart of this arrangement , the agent’s fiduciary responsibilities come into play. These include the duty of loyalty, confidentiality, reasonable care, and full disclosure. The agent is obligated to place the buyer’s interests above their own, keeping all financial and personal information confidential, exercising reasonable skill and care, and disclosing relevant information to the buyer about the property and the transaction.
The Buyers Agency Agreement is typically time-sensitive, ranging from 6 to 12 months, and can be renewed if needed. However, it is important to note that all parties should review and agree to the terms of the agreement, which ensures clarity and transparency throughout the real estate transaction process.
In conclusion, the Buyers Agency Agreement in North Carolina is an essential document that establishes a formal relationship between the buyer and real estate agent. It is a critical commitment that lays the foundation for an effective and beneficial collaboration in the pursuit of that dream home or ideal investment property.
Terms of the NC Buyers Agency Agreement
The foundation of an effective agency relationship with a buyer is a good agreement. In North Carolina, the standard form agreement that is used by real estate agents is known as the NC Buyers Agency Agreement (hereafter the "Agreement"). The intention of this article on the subject is to get into the main components and provisions contained in a North Carolina Buyers Agency Agreement.
Like the standard listing agreements in this state, the Agreement will set out the nature of the relationship. You, as the buyer, agree to be represented by the agent. In comparison with the listing agreement, however, the Agreement also spells out in detail the duties and responsibilities of the agent to the buyer. These are the usual agent duties: loyalty, disclosure, confidentiality, obedience, reasonable care and skill, and accounting. There are also two additional duties that are specific to the buyer-agent relationship: the duty to negotiate in your best interests and the duty to seek out other properties, not currently for sale, that would meet your needs. These other properties are referred to as "Prospective Property". By including the duty to seek out Prospective Property, the agent is obligated to search out pocket listings and houses that are not represented by a real estate agent.
The Agreement, like a standard listing agreement, also discusses the compensation of the real estate agent. Not only is the compensation discussed in the Agreement, but there is also a paragraph in it dealing with expenses. This deals with all of those expenses that the agent may incur that the buyer will need to reimburse the agent for, such as advertising. You can also list other expenses that are not specifically mentioned in the standard form.
One area that the Agreement does not really include much detail about is the exclusivity of the agreement. While the Agreement is the usual exclusive right to represent agreement that is typically used, there are few detailed provisions written into the Agreement concerning the exclusivity terms. Such details as the exclusivity being extended to other members of the agent’s firm are not written in the Agreement. Plus, there is no mention of the ability of the seller to revoke the exclusivity, such as if the seller breached the Agreement by, for example, selling the property without giving notice to the agent. These types of omissions could lead to misunderstandings as both parties might think that something is covered by the Agreement, when in fact it is not. However, this is generally not an issue as the Agreement, like most other standard form agreements, specifically state that it is intended to be a sample and should be reviewed and revised by the parties and their respective legal counsel.
Advantages of Signing a Buyers Agency Agreement
One of the primary benefits for homebuyers who enter into a "buyers agency agreement" is that doing so allows them to receive the professional guidance and expertise of their buyers’ agent during an important process – buying a home in North Carolina. There are numerous steps involved in the buying process, and since most people do not buy homes on a regular basis it is important to have the guidance of someone with experience and knowledge in the field. This is especially true if you are a first-time homebuyer or moving to a new area. An experienced buyers agent will be able to assist you through the process of home buying much more easily than buyers who have no professional representation and are trying to navigate the process on their own. Another benefit to signing a buyers’ agency agreement is to ensure that the buyers agent is working for YOU, and not the seller of a property. It is always a conflict of interest for a real estate agent to be representing both sides of a sale. Signing a buyers agreement allows the buyers agent to assist you with every aspect of the buying process, from house-hunting to making an offer and through the closing and your move into your new home. They will make themselves available to you for correspondence, including daily phone calls and emails if needed. Some buyers agents may also offer to help buyers with the selection of insurance and possibly even moving arrangements. The bottom line is that a good buyers agent works FOR YOU and not for a commission or to make a sale; rather, their goal should be to make your home buying experience as pleasant and stress-free as possible by helping you to avoid potential problems, getting you the best possible value for your new home, and acting as your "voice" during contract negotiations. You are their priority and their focus is on you.
Disadvantages of Buyers Agency Agreements
There are some potential drawbacks to signing a buyers agency agreement. First, you may be locked into that specific agent and specific agency for a while. Typically, the buyers agency agreement is for one year. So, if your agent is not performing well or acting in your best interests, your only recourse is to find another real estate agent who either agrees to build a cooperative relationship or to terminate it based on the specific terms of the agreement.
Another potential drawback is that if you find a property without your buyer agent, you may have to pay the buyer agent anyway, unless you are able to find an agent willing to act as a cooperating agent without a commission being paid to the buyer agent.
Lastly, when you sign the buyer agency agreement, you are agreeing to allow the buyer agent and cooperating agents to share your information with lenders, appraisers, inspectors and contractors. We can’t imagine a scenario where this would cause you a problem, but it is good to know that your agents will have the ability to share your information trade freely amongst the professionals involved in your home purchase.
Negotiating Your Buyers Agency Agreement
Armed with an understanding of the ways in which the NC Buyers Agency Agreement helps, rather than harms, a prospective homebuyer, the next question becomes how can you go about using the Buyers Agency Agreement to your advantage?
When both the seller and the buyer are represented by a NC real estate licensee, the obligations of the buyer and seller created by the NC Buyer Agency Agreement and the NC Seller Agency Agreement are reciprocal. In other words, the seller’s obligations to the buying agent and the buyer’s obligations to the selling agent are parallel to each other. If the buyer is represented by a NC buyer agent and the seller is represented by a NC listing agent, the buyers agent’s obligations differ only in that they are owed to the seller rather than the buyer. When negotiating your Buyers Agency Agreement with your buyers agent, keep this in mind.
By way of example, let’s say that you have engaged the services of a buyers agent to help you find a house to buy . Your buyers agent would have just as high a duty to the sellers agent if the seller had a different buyers agent.. Likewise, a sellers agent has a duty to both buyers and sellers equally, and will make every effort to further their interests. Your buyers agent would owe a duty to the sellers agent and the seller, if the seller did not have a buyers agent. The key difference going forward with a buyers agent and a seller’s agent is who your buyers agent’s fiduciary represents…the seller or the buyer. Knowing this, you can foresee where the conflict might arise and protect yourself with alterations in your Buyers Agency Agreement negotiated before it is signed.
In a typical buyers agency agreement, the buyers agent has no obligation to obtain the lowest available price or favorable terms for the buyer. They are simply required to act in the best interests of the buyer. You can change this provision if you wish, but you may need to explain why to your buyers agent.
Buyers Agency Agreement Legal Issues
Within a NC Buyers Agency Agreement, both the buyer and agent have certain legal, "non-negotiable" "waverable" implied duties and obligations with disclosure and active consent from the buyer. These duties and obligations include: I. Agent’s Duties 1. Fiduciary Duties Owed to Buyers. 2. Duties in Common with Sellers. II. Buyer’s Duty. III. Other Considerations Pursuant to North Carolina General Statutes ("NCGS") 93A-6 (a), in order for an agent to enter into a legally enforceable buyers agency agreement with buyers the statute authorizes NC licensed brokers (and other state’s licensed brokers) to act as buyers agents in North Carolina when engaged in real estate transactions by and through a NC broker serving as the "base broker organization for real estate professionals" while bringing a buyer into a Property transaction. When acting in a professional capacity as a buyers agent in the state of North Carolina, the Agent must comply with NCGS 93A-6(a)(1)-(3) and NCGS 93A-6 (b) and (c) as follows: "(b) An agent shall not refer a client to another licensee for services related to the real estate transaction that are also available from the agent unless the agent first informs the client that alternatives are available." "(c) An agent shall be liable to a client for the agent’s negligent or wrongful acts in action for breach of contract, tort, or otherwise. An agent may enter into an agreement to limit the liability of the agent to a client for acts or omissions in the performance of the agent’s duties to the client." NCGS 93A-6(a)(1)-(3) and NCGS 93A-6 (b) and (c) (emphasis added). Further, within the State of North Carolina, it is understood that the Buyer, as a party represented by an agent under a Buyers Agency Agreement (and also under a Standard Offer To Purchase And Contract, Sales Contract Form), has a duty of "Due Diligence:" whereby the Buyer has an affirmative duty to inspect their potential Property in it’s entirety before signing the Standard Offer To Purchase and Contract of sale contract. If the Buyer has any questions or concerns as to the Property, the Buyer has an absolute duty to raise them to the "Agent, Realtors or Brokers representing the Buyers" and "ask" for the answers and/or clarifications to all potential issues. The Buyer cannot sign the Standard Offer To Purchase and Contract by marking the box on the contract after reading the first section and initialing each section, agreeing to all of the terms and conditions of the contract, and then come back later and say that the standard contract was not adequate to protect their interests to a litigant and the Courts. This line of defense will NEVER work and will not hold water with the Courts. The buyer has affirmative "overwhelming" duties pursuant to the Buyers agency contract and the Standard Offer To Purchase and Contract of Sale to protect their interests and if for some reason, a potential issue is not addressed by the Buyers initial due diligence performed, then the Buyer loses the right to recover damages in a Court of Law related to the issue as a matter of public policy. Public policy considerations apply across the board to every buyer and every seller, and every party under contract (offerors and offerees) directly relates to the buyer conducting all due diligence required to protect the buyer’s interests (public policy) when buying property. The buyer has the affirmative duty to know EVERYTHING about the property before signing the standard NC offer form and cannot later assert ignorantia factum (ignorance of facts) if the buyer failed to carry out their duty to inspect the property before signing the contract. The NC Court’s interpretation of the law and the public policy considerations demand that this be the case.
Ending a NC Buyers Agency Agreement
The NC Buyers Agency Agreement is not a Commission-Only Contract
Understanding how to terminate a buyer’s agency agreement in North Carolina can be a little confusing as it isn’t explained that well in the standard real estate forms people use.
Most buyers believe they have an automatic "right" to cancel or terminate the buyer’s agency agreement, and/or that the Buyer is "automatically" or "effectively" terminated when they buy a house or property. Neither proposition is true. The NC Buyers Agency Agreement form has pretty specific instructions for how either a Buyer or Agent can terminate the agreement.
Let’s first focus on the Buyer’s rights under the standard NC buyers agreement form. They typically have the following rights to terminate: A Buyers Agency Agreement usually can be terminated simply by sending a written note from the Buyer to the real estate agent and firm stating that the Buyer no longer wishes to be represented by the agent and/or firm. When the real estate agent receives the termination notice, they must notify their real estate firm that the agency agreement has been terminated and then they both stop working for the Buyer.
If the Buyer wants the right to terminate the buyers agency agreement without providing a specific reason, they need to initial on the NC buyers agreement form in the space provided for this purpose.
What if the real estate agent gets a call from a Buyer saying they want to cancel the agreement without sending anything in writing. Well, they don’t need to send something in writing, but the Buyer indeed must send something in writing from the buyer(s) to the real estate agent or firm stating the agreement is terminated. The agent cannot unilaterally terminate the agreement without the Buyer’s written notice to the agent.
To make it simple for my clients, I always recommend my clients initial next to the "no reason" section of the buyer agency agreement form. Then, even if there is ever a day when they feel like I’m a slug or they don’t like something I’m doing or not doing, they can automatically terminate the agreement. I’ll take my chances that my Buyers like me enough to continue representing them and hopefully not use this option. The other benefit is that it saves the Buyer time and effort of notifying me of their intent to terminate the agreement.
Finding the Right Buyer’s Agent in NC
As both a seller and a buyer, it’s critical to have the right agent working for you. More than likely, this person will wield their influence and expertise on nearly every step in the process. It’s important that you select someone that you’re comfortable with, that you trust, and that has your best interests in mind.
When looking for a buyer’s agent, North Carolina residents can ask for referrals from their friends or family who purchased a home or from a real estate attorney. Keep in mind that you’re going to be spending time with this person over and over again. You should feel confident in hiring them as they guide you through this process.
As a buyer, you need someone with experience in the North Carolina real estate market to help you navigate and make the most out of the transaction. Your agent should use their expertise and knowledge of the market to help you find a property and negotiate a successful deal . The agent should also have good communication skills to ensure that you stay informed and updated at every step of the way.
It’s also wise to trust your instincts. If you don’t feel confident in the abilities of the real estate agent that you’re using, they are not the right choice for you. You should never feel bad about letting someone go if they’re not what you need. Each real estate transaction is different; your agent should be able to quickly adjust their approach based on your specific circumstances and needs.
If you’re ready to begin the buying process, start looking at agents today. Check their online profiles, reviews, and general listings to know more about how they operate. Don’t be afraid to contact a few and interview them over the phone or in person. This is an exciting time in your life, and the right person can help you make the final decision as you embark on your homeownership journey.
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