Non Exclusive Buyer Agency Agreement Defined
A non exclusive buyer agency agreement is an agreement a potential home buyer enters into with a registered real estate sales representative in order to receive some protections and services during their home search. The premise behind this type of agreement, is that it allows a potential buyer to look at as many properties with as many sales representatives as they choose, without committing to one particular sales representative. Basically, the non exclusive buyer agency agreement is a middle of the road option, not too strong or weak. Non exclusive agreements allow you to continue shopping around and looking at properties with the hope that sooner or later you will find the right sales representative and make a commitment, but that decision can be postponed .
Under this agreement, the potential home buyers are represented by the broker of the real estate sales representative until they have entered into an exclusive buyer agency agreement with the real estate sales representative, or an exclusive brokerage agency agreement with the real estate broker whose agents have shown the property to them. The potential buyer receives representation by registering under the non exclusive buyer agency agreement but commits themselves to no one representative or broker.
Potential home buyers should consider entering into a non exclusive buyer agency agreement for a few reasons. Those who do not want to feel like they are committing to long term relationships with real estate sales representatives right off the bat may consider them. After entering into this agreement, you will not feel obligated to work with a particular sales representative, and the sales representative will not be unhappy if you move on to look at other properties with others. It is a simple, easy agreement.
Term Clarification
A Non Exclusive Buyer Agreement is an agreement between a real estate agent that has been approved by the Real Estate Council of Alberta and a Buyer to purchase Residential, Commercial or Rural commercial properties. As with most legally binding contracts your Realtor will often use an Electronic Document Management system to email through the agreement to you, however you are not required to sign the agreement until you have had a chance to review it carefully with your lawyer prior to accepting or making any offer on the property.
The RECA approved Non Exclusive Buyer Agreement contains the following conditions:
a) This is a Non Exclusive Buyer Agency Agreement signed by both the Buyer and the agent signed in the designated space confirming their agreement to the terms and conditions of the contract.
b) Indentures the buyer to pay the agent the commission, interest, expenses and all the other charges paid by the agent if specified in the agreement.
c) Stipulates the commission to be paid in the event the buyer is provided "services" this determines both the amount of commission and the services offered by the agent.
d) Obligates that the buyer allows the agent exclusive agency (meaning the agent entrees into a contract to represent the buyer in a potential purchase of a specific property).
e) Many MLS Listing and Brokerage companies have a commission structure that is outlined in the MLS Listing. It outlines the amount of commission the cooperating brokerage/disclosure shall receive for bringing a buyer when a seller(s) sells a property, however in some cases sellers may choose to alter the amount of commission.
f) Outlines the obligations of the buyer including that the buyer must be exclusively represented wherever the buyer may want to view properties.
g) The Non Exclusive Buyer Agreement is non exclusive meaning buyers can have multiple non exclusive buyer agency agreements with multiple registered agents. Many buyers choose this as a way to keep their options open and enable them to work with multiple agents at once.
h) Outlines the effective date of this agreement within 60 days of signing the agreement, and any extensions that may arise after the effective date.
i) Specifies a Finders Fee or Referral fee (if applicable). Many Buyer Management Systems/Finder Programs/Vendor Management Systems charge a finders fee to both the Buyer and Seller typically paid by the Seller compensation to the Buyer’s Agent.
j) It is important that the document is signed by all parties and witnessed after it has been correctly completed. After the agreement has been signed Copy A is provided to the Buyer, Copy B provided to the Seller if there is one, Copy C provided to the buyer once they find a property and make an offer as per the details outlined in the Buyer Agreement.
Benefits for Buyers
A non exclusive buyer agency agreement provides a range of benefits for home buyers. The first is flexibility. A non exclusive buyer agency agreement allows purchasers to work with more than one agent, even simultaneously, without having to worry about who is paying and whether they are paying twice. A non exclusive buyer agreement also allows home buyers to look at properties in different locations and in different price ranges without having to worry about the commission under the non exclusive buyer agency agreement overlapping with the commission under another non exclusive buyer agency agreement. A non exclusive buyer agency agreement can also provide purchasers with access to better deals. Multiple agents increase the chance of being aware of the best properties and prices in an ever-changing property market.
Possible Downsides
The potential drawbacks to consider when it comes to using a non exclusive buyer agency agreement include possible loss of agent loyalty to the purchaser that can result from the fact that an agent often has multiple client relationships under a non exclusive buyer agency agreement and will therefore go where ever the greatest compensation and listing opportunities are on a transaction by transaction basis. There is the possibility that the buyer may develop multiple relationships with competing agents that may provide disincentives for the buyer to focus on a specific relationship. For example , should that same Buyer that is working with a non exclusive buyer agent choose to enter into a mutual representation relationship with another agent in the hopes of receiving preferential treatment from that agent in terms of compensation and the exclusive right of representation, such an event may signal the death knell for the prior non exclusive buyer agent. In addition, if that Buyer has retained multiple agents it is conceivable that the development of a non contractual exclusive representation relationship could be problematic. Finally, it may be the case, that on a transactional basis a specific property seller may not agree to the non exclusive buyer agency relationship and may require that any prospective buyer represent himself or herself as the case may be.
Selecting the Best Agent for You
Choosing the right agent to assist you should be a process that you consider very closely. You are paying a lot of money in commissions and being represented thousands of dollars. You should not have any problem "interviewing" several agents before deciding who to hire as your agent. Here is a few considerations to keep in mind when conducting your search:
- Find an agent that specializes in your market or has the most experience. While your Aunt Judy might have sold a couple of houses in the past, she does not have the knowledge of a licensed realtor that specializes in real estate sales.
- Pay special attention to communication skills, so make sure to ask about the agent’s preferred method to communicate with clients, what time they typically will communicate with clients and what are some of the cons with communicating with them.
- Make sure to specifically ask if the agent plans to exclusively represent you. Many times you will find that an agent that does not want exclusive representation is not going to put any extra effort into your representation. You want an agent that is not too busy to represent you properly.
- Ask them why you should choose them over one of their competitors. This is a great question to ask because you can really see what the agent is like. If he can’t come up with something to say, then you know you should exclude him from the pool.
After an Agreement is Signed
Upon entering into a non exclusive buyer agency agreement, we would suggest that a buyer immediately send a message (text, email, or phone call) to all of their agents introducing them to one another. This is much easier today due to the prevalence of text and email. If a buyer does not have access to such technology, they should do so immediately. We suggest that communications should be sent to only those agents that are working for a buyer and not broadcast. Such messages should be polite and professional. In the message the buyer should also indicate their preferences to the agents. For example, buyer might indicate what areas of town they are interested in, specific types of homes (townhome, condo, single family), their price range or budget and any other information that might be helpful in determining the right property. The buyer should also set out their preferred method of communication (text, phone, email, etc.) to let the agents know how they want to communicate. A buyer should also set guidelines in order to avoid confusion about who is doing what and holding agents accountable for finding the right property for them. The buyer could say that each agent will get a certain number of days to find a property for them . So if they have three agents, they may allocate three days. If they have three agents, on day one each agent will look for properties. On day two, agent 1 will continue to search for properties, but agents 2 and 3 will have another 24 hours to search and to contact the buyer with anything found. On day three, agent 2 will continue to search for properties, but agents 1 and 3 can continue to search for properties and contact the buyer. Or alternatively, buyers can decide who does what on which days. There are countless variations as to how to allocate responsibilities. Having a plan documented in writing, or at least communicated to all agents by text, email or phone, is important. It holds everyone accountable and will ensure the buyer that all agents are doing their part. It is also important that the buyer keep an accurate list of whom and how they were contacted. Licensing rules require that the agent of record be able to determine when their client has bought or rented a property. If an agent of record has a record of what properties were shown to their client and how and when the properties were shown, they will not be penalized. However, if the agent cannot account for how their client got that listing, they could be held in violation of the licensing rules.