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When to Sign
You should sign the Texas Association of Realtors (TAR) Buyer’s Representation Agreement as soon as you are confident you have chosen your Realtor. Signing the buyer’s representation agreement does more than just commits you to an agent. It commits the agent to you.
Note: I am not a lawyer. Nothing herein should be construed as legal advice. The TAR and TREC contracts change regularly. Contact me for current versions.
Follow along with a copy of the TAR Residential Buyer/Tenant Representation Agreement
This section simply identifies the buyer and the brokerage entering into the agreement.
This section essentially makes your agent your agent.
Defining “acquire”, “closing”, “market area” and “property”. These words are used elsewhere in the contract and can determine whether and how an agent is paid.
Possible market areas include “Texas”, “Bell and Coryell Counties”, “CTXMLS”. I’ve even done a single property address in the market area for an investor who was willing to give me a shot on a property but was still working with other agents on other properties in the same area.
The length of time the agreement is in effect. I often do three months. If a buyer is not buying for another six months, or is doing new construction that might be as much as a year out, I will do a six or twelve-month term. It is entirely negotiable. There are ways of terminating representation prior to the end of the term.
5. Broker’s Obligations
There are other ethical and legal obligations agents have to their clients. This piece is in the contract and essentially says that the broker must competently serve their client in the market area.
6. Client’s Obligations
A buyer can only have one buyer’s representation in effect at a time in the same market area. Buyers are required to disclose to other parties that they have an agent representing them.
- You are who you say you are
- You are not already in an agreement with someone else
- You do believe you are able to buy a home
- Disclose any relocation support you are receiving that would be relevant to the home purchase
Checking the Box A in Paragraph 8 simply allows your agent to show you their brokerage’s listing as well. I highly recommend checking Box A.
The only reason for checking Box B is if you are concerned that an agent is going to treat you unfairly in an intermediary situation. There are fair ways of handling intermediary situations at most brokerages in which both buyer and seller have representation.
9. Competing Clients
It is possible that your agent has other buyers who may like and make offers on the same homes you do. The agent is still bound to confidentiality to both parties and cannot disclose anything about the other party. They are required to give the same advice to both buyers and simply do what you instruct them when making an offer or handling a multiple offer situation.
10. Confidential Information
Your agent is required to keep your information private. For example, if your agent knows you are willing to offer $300,000, but want to start at $280,000, they cannot tell the seller that $300,000 might work if $280,000 doesn’t.
The seller is not bound to confidentiality, however, and can share the terms of your offer with other parties.
11. Broker’s Fees
Wait, I thought the seller pays the Realtor commission?
They do 99.9% of the time. Paragraph 11B explains that your agent will first seek to get payment from the seller. If the home is listed on the MLS, there is already an agreement for the seller to pay. Often builder contracts include a section promising to pay your agent as well. The most common exception is when working with a FSBO owner. However, even then, it is possible for your agent to negotiate with the seller to pay the commission.
I generally have 3% as the commission specified in 11A. The other two boxes are for leasing agents, which are rare in the Fort Hood area.
Technically, an agent “earns” their commission when you execute a contract. Also, if the buyer defaults on the contract, they also owe the agent a commission. An example would be a buyer who is working with multiple agents without their knowing it, and signing multiple buyer representation agreements (in violation of Paragraph 6). If they buy a home with one agent, it is possible the buyer will owe the other agents a commission.
The agent is allowed to earn whatever commission is offered, even if over the amount in 11A. For example, it is common for builders to offer end of year bonuses for 4%, 5%, even 6%+ commissions.
11F allows agents to receive referral fees (which must be disclosed), compensation if they are simply helping with a builder on the seller’s existing land, or reimbursements for specific actions.
The protection period allows an agent to submit a list of properties after the term expires. If the buyer buys any of these properties within the inspection period, the agent still earns a commission, even though the term is expired. This prevents buyers from waiting until the end of the agreement and then buying a property that the agent helped them find. The protection period 30 days is common and what I use.
Escrow authorization is the buyer’s permission for the title company to pay the agent at closing.
And finally, the county only matters as it identifies which county jurisdiction is responsible for resolving any issues with the contract.
Buyer and agent must attempt to mediate their differences before resorting to lawsuits.
If a buyer defaults, the agent may be entitled to a commission. If the broker defaults, the buyer can
14. Attorney’s Fees
If it comes to lawyers, the loser pays for them.
15. Limitation of Liability
Your Realtor is not responsible if you injure yourself while viewing homes. Be sure to be careful, especially when around incomplete construction when things like stair rails and walls are missing, and construction equipment and materials might not be secured.
I include all of the following addenda with my buyer representation agreements.
- Information About Brokerage Services
- Protecting Your Home From Mold
- Information Concerning Property Insurance
- General Information and Notice to a Buyer
- Protect Your Family From Lead in Your Home
- Information About Special Flood Hazard Areas
- For Your Protection, Get a Home Inspection
17. Special Provisions
If there is a unique item you or your Realtor want to add to the contract, there is room to do so here.
18. Additional Notices
This is a hodgepodge of items that didn’t have a spot elsewhere in the contract. It notes that Realtors must comply with anti-trust and fair housing laws, Realtors are (usually) not lawyers, inspectors, or surveyors, and you shouldn’t expect them to be competent at those tasks. Lastly, you may want to consider a home warranty when purchasing a home for additional protection.
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