To avoid problems, the buyer and broker enter into a contract defining the legal relationship, called a buyer-broker agreement. Buyer-broker agreements explain the duties and responsibilities of the parties and set out exactly what services the broker will provide. There are several types of buyer’s broker real estate agreements representing the nature of the relationship between the buyer and the broker. These contracts can generally be provided by the broker in preprinted “fill-in-the-blank” forms adapted to the laws of the particular state.
1. Nonexclusive right-to-represent contracts
This buyer-broker agreement defines the broker’s responsibilities to the buyer, the relationship between the broker and the agent, and the buyer’s obligations. It provides for compensation to be paid to the broker if the broker proposes the house the buyer decides to buy or otherwise represents the buyer.
If another party pays a commission to the broker, this obligation is removed. Additionally, the buyer is typically able to buy a home through another broker as long as that home was not proposed by the previous broker. Usually these agreements may not be revoked except for specified reasons.
2. Exclusive right-to-represent contracts
This is the most common buyer or renter-broker agreement between home buyers or renters and brokers. This agreement outlines the obligations of the broker, the broker-agent relationship, and the responsibilities of the buyer or renter. What distinguishes this contract is the buyer or renter may not retain more than one broker to assist him or her. It sets forth the commission amount to be paid to the broker, which is owed even if the buyer or renter finds the house herself or another broker does so. But if another party pays the broker the commission, the buyer or renter doesn’t have to.
In comparison to nonexclusive contracts, which are usually for one or two months, exclusive agreements might run from several months to a year and generally cannot be revoked except for specified reasons.