New Buyer Agency Agreements

Starting August 14, 2024, the National Association of Realtors and Department of Justice will mandate that Realtors have either a Buyer Agency Agreement or a Touring Agreement in place before showing homes to potential buyers.The Buyer Agency Agreements are provided by our local Realtor association and are anything but straightforward. They’re cumbersome and sometimes difficult to understand. However, this new rule is non-negotiable. Realtors who fail to comply by securing these agreements before showing homes risk facing fines and potentially losing their licenses. So, here’s a breakdown of what these new agreements entail:

View the Virginia Buyer Agency Agreement

Appointment of Broker (Section 1): This section grants the broker the right to represent the buyer in purchasing real estate. When you sign this agreement, you're officially hiring the broker to work on your behalf.
Buyer's Representations (Section 2): Here, the buyer confirms that they aren’t already under contract with another broker for similar services in their respective location. It also requires you to disclose any properties you've visited on your own or with another agent.
Purpose (Section 3): This part clarifies that the broker is being hired to help you acquire a specific type of property, which you will describe in this section (e.g., a single-family home, a condo, etc.).
Term and Termination (Section 5): The agreement starts once signed and typically lasts for 90 days unless otherwise specified. It can be terminated earlier if the buyer provides written notice. However, if you terminate without a good reason, you might owe an early termination fee.

How to Cancel the Agreement:

1. Provide Written Notice (Section 5): If you, as the buyer, want to cancel the agreement before it ends, you must give your broker a written notice stating that you wish to terminate the relationship. This notice must be clear and should be delivered in a way that ensures the broker receives it (like email or certified mail).

2. Release of Brokerage Relationship (Section 5): After sending the notice, both you and the broker will need to sign a document called a Release of Brokerage Representation Agreement. This officially ends the relationship between you and the broker. There may or may not be an early termination fee. 

Broker's Duties (Section 6): Your broker is responsible for working in your best interest, which includes finding properties that meet your criteria, presenting offers, and maintaining confidentiality. The broker is also obligated to be honest and act in accordance with the law.

Buyer's Duties (Section 7): As a buyer, you agree to work exclusively with the broker, meaning you won’t use another broker during the term of the agreement. You must also provide necessary personal and financial information to assist the broker in finding properties for you.

Compensation (Section 8):

• Negotiable Fee: The broker’s compensation is fully negotiable and not controlled by any laws, multiple listing services, or associations.
• Buyer’s Responsibility: The buyer agrees to pay the broker a specified percentage of the gross sales price or a flat fee if they purchase a property during the term of the agreement. This payment is typically made at settlement. If the seller or their representative pays the broker any compensation, that amount will be credited towards what the buyer owes.
• Additional Circumstances: The buyer must also pay the broker if, within a specified period after the agreement ends or is terminated, they purchase a property, unless they’ve signed a new agreement with another broker. Additionally, if the buyer defaults on a contract made during the term of the agreement, the broker’s compensation is still due.
• Retainer and Service Fees: A non-refundable retainer fee may be required and can be credited towards the total compensation. An additional flat service fee (Junk/Admin Fee) may also be charged.
• Property Types: The compensation terms apply to all types of real property transactions, including new construction, off-market listings, and FSBOs (For Sale By Owner).
• Excess Compensation: The broker cannot receive more compensation than what is specified in the agreement.

Types of Representation (Section 10):

• Designated Representation: Different agents within the same brokerage represent the buyer and seller separately.
• Dual Representation: The same agent represents both buyer and seller. Both situations have confidentiality requirements, but it’s important to know that your agent might represent someone with competing interests.
• By consenting to one or both types of representation, you are allowing your agent to show you homes represented by their brokerage or themselves personally. 

Compliance with Fair Housing Laws (Section 11):

Buyer Default (Section 12): If you breach the agreement (e.g., by not following through with a purchase after an offer is accepted), the broker can terminate the contract. You may be responsible for any legal fees the broker incurs to enforce the agreement.
Disclaimers (Section 16): The broker is not a lawyer, inspector, or financial advisor. You’re encouraged to seek advice from professionals in these areas if needed.

Miscellaneous (Section 17): This section ensures that the agreement is governed by Virginia law and outlines that any changes to the contract must be in writing.

Final Thoughts:

This contract is a binding legal document that defines the relationship between you and your broker. It’s important to understand the responsibilities and obligations you’re agreeing to before signing. If you have any doubts, consult a real estate attorney to review the document with you. If you have any other questions or concerns, please feel free to reach out to us.