"There can be bad apples in every business," says lawyer and real estate author Mark Weisleder. "But I truly believe that if buyers take the time and do their homework in finding a really good agent, a BRA is a win-win."
While more agents are starting to request that buyers sign an exclusive BRA agreement with them, "no one is forced to sign an agreement," says Bill Johnston, president of the Toronto Real Estate Board. "And the agreement doesn't mean you have to buy."
Proponents of BRAs point out that signing a contract changes the nature of the buyer/agent relationship from that of a customer to a client. As a customer, you have the right to expect good service, but as a client your agent has what is called 'fiduciary obligation' to you. This includes such things as loyalty, obedience, confidentiality and due diligence in all matters, including financial.
Some of the standard clauses include:
"Even though I'm a lawyer and have skill in negotiating, I benefit from having a representative in a transaction where emotions are involved, such as buying a home," he says.
Agents will be motivated to work on your behalf knowing that they will earn commission on any purchase, no matter how you discovered the property.
"The days of buyers running around to open houses and calling 10 different agents to view a house are a dog-eat-dog world," says Rick Valouche, president of the British Columbia Real Estate Association. "Having a contract makes sense."
When acting under a BRA, the agent is bound by confidentiality, so information that could undermine your bargaining position won't be passed on to the seller.
A real estate agent may be representing other potential buyers or even the seller themselves. A BRA contract should require full disclosure and clearly state how the agent must act under such circumstances to avoid conflict of interest.
While you can benefit from contracting with an agent, it may not cost you anything since their commission is typically covered by receiving a shared portion of the fee paid by the seller.
When you contract with an agent, you're buying their expertise, so consider just what that represents in terms of geographic area. If you find an agent's sales record is based in a particular part of town, limit your agreement to that area.
The bottom line
Remember that you can modify and change clauses in a standard agreement upon signing and after.
"If you object to something, don't agree to it," advises Weisleder.
But for young and inexperienced buyers such as Toronto-based Darren Smith, 32, and his partner, signing a BRA has given them peace of mind.
"Our agent has been considerate of our financial situation. We knew conditions were negotiable, but we went with 90 days and unlimited territory because we wanted to give our agent the chance to find us a place," he says.
Diana McLaren is a writer in Toronto.
|-- Posted: May 16, 2011