As a home buyer in Florida, it’s important that your personal interests are protected. After all, this purchase is most likely the biggest one you’ll ever make! It’s helpful to have a professional opinion on location, cost, and quality — not to mention someone to help you navigate home tours, mortgage loans, and the closing process.
That’s where a buyer brokerage agreement (BBA) comes in. This legally-binding contract between a real estate broker and a potential homebuyer outlines the responsibilities of both parties, including the broker’s commitment to representing the buyer’s best interests. Remember: The listing agent on a property is contracted with the seller, meaning that, as a home buyer, you need to secure your own representation.
In today’s blog post, let’s dig into buyer brokerage agreements in Florida.
To start, let’s look at the history of buyer agents and buyer brokerage agreements. In the early 1990s, both buyers and sellers sued Edina Realty, a Minnesota-based company, because buyers were working with agents at the firm while other agents listed the properties. Before this landmark case, the traditional model in the real estate industry was the seller agency. With this approach, real estate agents worked for the property seller, and buyers were left without proper representation.
Now, a buyer brokerage agreement is required anytime a real estate broker provides brokerage services to a buyer, like setting up a house tour. Note that, if the broker is only holding an open house or giving access to a listed house to an unrepresented buyer, a buyer brokerage agreement is not needed.
There are four types of buyer brokerage agreements, each with a different type of broker representation:
Single agent
Transaction broker
Single agent with consent to transition to transaction broker
No brokerage relationship
Buyers often avoid signing these contracts, believing that they’ll receive a better deal or save money without a buyer brokerage agreement. However, that’s simply not true. Without a buyer agent, home buyers face a number of problems: losing money, losing their new homes…even “purchasing” properties that aren’t for sale!
Regardless of the type of agreement, the buyer agrees to work exclusively with the broker in exchange for paying the broker an agreed-upon commission. In many cases, the seller pays the buyer brokerage agreement fee. If that’s not the case, the buyer agent is required by law to be up front about potential buyer fees relating to commission at closing (usually two to three percent of the home purchase price). Note that some contracts also include termination fees, which are based on the agent’s experience.
Meanwhile, the buyer broker agent who represents you is obligated to act with your best interests in mind. Once the contract is signed, they have an ethical and fiduciary responsibility to represent the buyer in the best way possible from contract execution to closing. They should provide professional advice and assist with locating and viewing properties.
The buyer brokerage agreement can last from 30 days to several months. At The Urban Dog Group, we work with our buyers to determine the best timeframe for the agreement. For instance, if a potential buyer calls from a listing on Zillow, we can send over a document for a single showing, called a single agreement. Or if a buyer is a repeat, long-time client, we can draft a six-month (180-day) multiple-property buyer brokerage agreement.
Before we close, we’re excited to share that The Urban Dog Group is the prize sponsor at this weekend’s Ugly Sweater Pawty at the Dog Bar in St. Petersburg.
Come join us on Friday, December 20th from 7 to 11 p.m. for good dogs wearing bad sweaters. Costume categories include best ensemble (thinking matching costumes for you and your pup), ugliest sweater (the tackier, the better!), and most creative holiday flair. All funds go towards Crikey Wildlife Rescue.
Wishing you and your furry friends a happy holiday season!
Let The Urban Dog Group help you with your real estate needs. Contact Christine Elias at caerealestate@gmail.com.
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