As a buyer, there is a great distinction between being a customer and being a client.

A customer is a buyer who has not signed a buyer agency agreement with a realtor. A client, on the other hand, is a buyer who has entered into an agency agreement with a professional realtor.

What is an agency agreement?

This is a written agreement between the prospective buyer and his/her designated realtor that the realtor is authorized to act exclusively on the behalf of the buyer for a set period of time.

What are the benefits?

Unlike the case where a buyer is merely a customer, a buyer agency agreement means the realtor is obligated to keep any information about you in the strictest of confidence. This is particularly important during the negotiation process. For example, a buyer agency agreement means that your realtor should not disclose to the seller your motivation for wanting to purchase the home and thus damage your bargaining position.

Another distinct benefit is disclosure. If you are a customer, as opposed to a client, your realtor is obligated to tell the seller all information they know about you. This includes, but is not limited to, how much you are willing to pay for the seller’s home.

Of course, another essential component is the counseling of clients. As a professional realtor and a buyer’s agent, I work under the premise that it is important to provide as much information as possible to each and every one of my clients. This means I want to give my clients all the pertinent facts about the neighbourhood and housing related concerns. On the other hand, a sub agent is not obligated to counsel the buyer on such matters.

Our philosophy at Team McDadi is to ensure that each buyer has the best possible representation. This includes locating the best possible homes, securing the most favourable terms and conditions, and obtaining the best mortgage product in the marketplace. This is best achieved by having an agency agreement with a realtor.

Many people don't realize that to date, agency representation is overwhelmingly in favour of the seller. An interesting statistic compiled by the National Association of Realtors (NAR) indicates that 4 of 5 homes sold are done so through a real estate professional. However, less than 50% of the buyers have representation at the offering table.

Surprisingly, the study revealed that Internet home buyers are ten percent (10%) more likely to use an agent than offline buyers. It further showed that 60% of all buyers surveyed wanted a real estate professional to help them find a home, 12% wanted help with pricing, and 8% with financing.

What are the pitfalls of signing a buyer agency with a realtor?

Some consumers don’t want to feel like they are committed to working with only one realtor during their house hunting process. They may wonder what to do if they have signed a buyer agency agreement with a realtor they have become unhappy with. At Team McDadi, we have an EASY EXIT program in place for buyers. It means, essentially, that if a buyer is unhappy with our services, they can cancel their agreement at anytime without any cost or obligation.

Another concern for many buyers is what if they decide to purchase either a brand new home or a private sale home, where their realtor will not receive any compensation. In these instances, understandably so, a buyer does not want to be liable for realtor fees. This is a valid point and to this end, Team McDadi provides exclusions in the buyer agency agreement so that commissions would be waived.