When you are looking to sell or purchase a home with a registered real estate professional, your broker or sales representative will ask you to sign a Listing Agreement or Buyer Representation Agreement.
A representation agreement is the contract between you and the brokerage that permits them to help you market and sell your current home and/or buy a new home. These agreements must be in writing to protect the interests of all parties.
Signing a representation agreement confirms in writing that you are a client of the brokerage, and you understand the terms, rights and obligations of the brokerage-client relationship. As a client, you understand and accept that the brokerage has a special responsibility to follow your instructions, protect your confidential information, and promote and protect your best interests.
There are five critical pieces of information that all representation agreements must correctly include:
1) The date the agreement will take effect and expire
2) The names of all parties involved
3) The property/geographic area to which the agreement applies
4) The commission payable to the brokerage and how payment will be made
5) The services that will be provided by the brokerage
Before You Sign
Discuss all of the services that will be provided and understand which ones won’t be. This is the time to clarify fees and costs related to these services and make sure the written agreement is clear. You should also take time to ask what the broker or salesperson expects from you as part of the agreement.
Representation Agreements Are Legally Binding Contracts
Remember that you are entering into a legally binding agreement with the brokerage, authorizing them to represent your interests in the sale or purchase of a home. You can expect to receive a copy of the signed agreement at the time of signing.
Don't Sign If You Don't Understand
Take the time to read the agreement thoroughly. Ask questions. Your broker or salesperson can’t provide legal advice, but they are familiar with these agreements and should be able to answer your questions, and explain what the clauses mean and what effect they will have. If there is something they can’t address, they can refer you to someone who can. Feel free to seek legal advice at any time.
The Holdover Clause
Listing and Buyer Representation Agreements typically include a holdover clause. Generally, this means that within a specified number of days after the agreement expires (the “holdover period”), if you sell to a buyer that was introduced to your property during the term of the agreement, or if you purchase a home that was introduced to you during the term of the agreement, you would still be responsible for paying commission to the brokerage with whom you were originally under contract. The length of the holdover period may vary and will form part of your agreement. As with other terms, it must be agreed to by both you and the brokerage.
Questions?
If you have any more questions about the Listing and Buyer Representation Agreement, or if you would like more information about the home buying and selling process, please contact me; I will be happy to help.