What is a Buyer Agency Agreement?

A “buyer agency agreement” is a contract between a buyer and a real estate broker.  Contracts often vary in length, and can include or exclude certain geographical areas.  The buyer agency agreement lays out the commitments of the buyer to the broker, and of the broker to the buyer. Generally the agreement also contains a clause stating that you will work exclusively with that broker for the specified time period. Is it expensive to use a buyer’s broker? The compensation that a buyer’s broker receives (also called the “selling broker”) typically comes from the seller’s proceeds and is a percentage of the total commission charged by the listing company. That information is available to the broker through the Multiple Listing Service (MLS).  In such a case, there is no cost for a buyer to be represented by a broker. If a buyer is interested in purchasing a property not listed in an MLS (for example, a for sale by owner), it is possible that the seller will not compensate the buyer’s broker.  In this case, a buyer agency agreement would detail the buyer’s obligation to compensate their broker.  Typically, even with unlisted properties, the seller compensates the buyer’s broker.