What are the benefits of signing a Buyer's Representation Agreement (B.R.A)?

I see you are in Edmonton, I have a presentation that I show to people from Ontario. The benefits in Alberta will be very similar to those in Ontario, if you send me an e-mail I will send you the presentation, but I caution you, the presentation is based soley on Ontario law and you will still need a bit more clairification from an Agent in Alberta. If you would like it feel free to send me an e-mail apatterson@sutton.com

To answer your question the biggest benefit to signing a BRA is that you have a Realtor representing your best interests. If you do not sign a BRA you can still work with a REALTOR, but they are actually working FOR the Seller. If you do not sign a BRA a Realtor owes you Honesty, if you do sign a BRA a Realtor owes you Loyalty, and must work in your best interests among other things.
I hope this helps you to make an informed decision, however before a REALTOR allows you to sign any doccument they should be making sure that you fully understand it and answer any questions you may have.

I you have a Realtor acting for you without a BRA, he/she is "just a guy who knows a guy" - a potential customer. If you have a BRA, the Realtor can represent "I have a CLIENT" - big difference.
The main benefit to a Realtor working for a client is that duty of Undivided Loyalty as expressed earlier. A Realtor knows more about the market and the transaction than he/she will probably use on any given transaction, but having the overall knowledge is very worthwhile when the unexpected but common quirks come up.
Also a Realtor who has a Client will work doubly hard for the Client, knowing that there is a bi-lateral commitment to the project, and they are not going to be "scooped" at the last minute by an unforseen opportunity (ie. nice open house) where their efforts could be nullified by a Buyer's whim.
In British Columbia (and I think in Alberta) there is the opportunity to discuss and fix the Buyer's Agent's remuneration - which will usually be paid by the Seller anyway - this gives peace of mind to all parties that they know what some of the variables are, and can negotiate the "bottom line" accordingly.

It creates an agency relationship between you/the buyer and the brokerage/representative. Establishes buyer representation, confidentiality, also explains services the brokerage will provide, establishes a fee arrangement for services and specifies obligations the parties to the agreement may have.
To have B.R.A. signed is benefitial for the Buyer as well for the REALTOR.

Residential real estate is the epitome of a professional service business and as such should be built upon client service. Most people may think of the words “client” and “customer” as being interchangeable terms however nothing could be further from the truth. There is not only a definitional difference between the terms clients and customers but also a strategic, operational, legal and philosophical differences between their meanings.

A “customer” is a buyer who is receiving no representation from the agent that is facilitating the home purchase for the seller. A “client” receives a “fiduciary” duty of care from their agent. In other words the buyer’s Realtor® is responsible for putting the interests of the buyer FIRST. This is agreed to in writing and provides the buyer with a tangible contract stating the duties of care owed to them.

Realtors® have the following responsibilities to customers:

Honesty: As a customer, the Realtor® shall not make a statement or action that can result in fraud or misrepresentation. All laws and regulations pertaining to the transaction must be obeyed including the disclosure of material facts. Every individual is owed honesty.

Accounting: As a customer, the Realtor® is required to promptly report to the customer monies or property received and paid out. Upon request, they must provide an accounting of these actions. This duty also requires the Realtor ® to safeguard monies and property held on behalf of the customer.

Component service: As a customer, the Realtor® provides services that should conform to the standards of practice and competence that are reasonably expected in the specific real estate disciplines in which they engage. In other words, as a customer, the Realtor® should not try to provide specialized professional services concerning a type of property or service that is outside their field of competence.

Agency and material fact disclosures: As a customer, the Realtor® must disclose agency relationships including an explanation of the difference between a customer and client relationship at the earliest opportunity. This is to ensure that the customer can protect their own interests such as not revealing confidential information. Material facts about properties must be disclosed.

Realtors® have the following responsibilities to clients:

Obedience: Your Realtor ® must follow all reasonable and lawful instructions but not exceed the scope of authority conferred by the client. That is, do not make decisions of the client.

Undivided loyalty: Your Realtor ® is prohibited from advancing any interests adverse to the client’s interest or conducting the client’s business in such as way as to benefit a customer, the representative or any other party to the detriment of the client’s interest.

Full disclosure: Your Realtor ® is required to disclose affirmatively and honestly all information concerning the transaction and property that might affect the clients decisions at the earliest opportunity. The Canadian Real Estate Association (CREA) Code of Ethics defines earliest opportunity as the time before the Realtor® provides professional services that go above providing information as a result of incidental contact by a customer.

Confidentiality: Your Realtor ® is prohibited from communicating your confidential information both during and after completion of your transaction. Confidential information must be kept confidential unless you decide to release your Realtor ®. However, the material facts about defects of a property are not confidential

Accounting: Your Realtor ® is required to promptly report to you all monies and properties received and paid out. Upon request, they must give an account of these actions. This duty also requires the Realtor ® to safeguard monies and property held on behalf of the client.

Skilled and Conscientious Service: Your Realtor ® is required to protect you from foreseeable risks or harms and recommend that you obtain professional advice or assistance when you are outside the scope of the Realtors ®.

The responsibilities owed to the customer may sound impressive and may meet your needs. However, in comparison to those of a client it is evident that there is not only a legal responsibility owed to a client however the value-added offerings bestowed on a client clearly supersede those of the customer. In a client relationship your Realtor ® will have your interests at heart and not . As a client you are advised, educated and work towards a purchase strategy whereas as a customer the seller is protected, you are informed of only the facts and their is no strategic purchasing consultation.

At the end of the day ask yourself the following question, “How do you want to be cared for in one of the most significant financial transactions in your life?”

The province of Quebec, might very well be at the furthest tip of the scale such that many brokers simply are not comfortable using the Buyer's Representation Agreement, AKA The Buyer's Contract to Purchase. In Montreal, this agreement is most commonly used, however in Outaouais (ie; Gatineau sector) it is seldom used or applied. So again, it depends on what part of Quebec. But what appears to hold more consistently is its use throughout the rest of Canada is most often applied.

Most people are aware why buyers are reticent of signing this type of agreement.

What is seldom addressed is how some BROKERS perceive this type of agreement themselves.

Understanding the Reasons why Brokers might also feel reticent in signing the Buyer Representation Agreement:

1. Brokers may not necessarily want to be tied down to a Buyer with whom the relationship might not be the best fit.

2. They know that a dozen other broker/agents in the region who will accept to work with buyers without any representation agreement (as collaborating brokers only). So why go through the futility of convincing a buyer of the merits since the probability remains high for a specific local culture that other brokers would be more than happy to show dozens of homes without a buyer's agreement to the same buyer?

3. Why enter a buyer's agreement in writing if the buyer perceives real value in the services the broker provides and views this as sufficient grounds for establishing trust? Why rock the boat of an already healthy relationship and create doubt and concern unnecessarily by bringing up a buyer's agreement if there's great chemistry that leads to a fulfilled sale?

4. The belief should the first week of the relationship prove to be uncomfortable and unpleasant for both broker and buyer, having no agreement allows the collaborating broker to cancel his services/relationship with the buyer. There is an equal sense of freedom accorded to the broker as well who feels the buyer is "too tacking on resources and time" or simply too unpleasant to work with.

ON THE FLIP SIDE:

The ultimate argument for entering a Buyer Representation Agreement as written by Goran Askraba:

"10 agents to work for you, the Buyer and only one of them would get paid??

Do you work for free??

That is one of the reasons why Buyer Representation Agreement was introduced in the first place. Let’s say you are a real estate professional (broker/agent) and you are looking to find a house for your buyer. You don’t have any contract signed with your Buyer. You show your Buyer 50 houses during the period of 5 months…..Then your buyer goes to an Open House and buys a house directly through the agent that was holding the Open House and that agent gets paid.

So, after 5 months of working hard and showing 50 houses to your buyer ..you don’t get paid??!!!

How would you feel about that?

[GOLDEN QUESTION] Who do you think will work harder for you?: Agent who knows that he will get paid if he findS you a good house….or agent that is showing you houses knowing that you are working with 4 other agents and that he might not get paid for all his work?

All members of our real estate board have access to the same houses on MLS system. If you have 4 or 5 of them working for you…they will be showing you the same houses and giving you the same information. Does that make any sense?

I understand that in real estate, like in any other industry/profession there are good professionals and bad ones….As I said in my original post; your job is to do a good research, interview a few real estate professionals…find one that you think can do the best job for you and make sure that you check and fully understand any contract before you sign it."

source: http://kwrealestateforum.wordpress.com/2010/03/19/i-am-stuck-with-a-buyer-representation-agreement/

Something to seriously consider if you are a buyer.

Concluding from my post above:

Well, I have to admit, I like the agreement and I like to use it with buyers that have complex situations such as a buyer who visits a home with a listing agent and DID NOT REALIZE that they could use their own agent to visit and draw up an offer, then during the visit, should the buyer feel uncomfortable with the listing agent and decide after the visit to use the services of a buyer broker with whom THEY FELT COMFORTABLE and WANTED TO ESTABLISH A PROFESSIONAL RELATIONSHIP, a written buyer agreement must be used.

Why?

Because without one, a buyer broker simply becomes a "Collaborating" broker who depends on the listing broker to pay a split commission to the collaborating broker.

In Quebec, if the Listing broker had opened the door, conducted the visit and took the buyer's contact details directly without any collaborating broker present, the listing broker is then deemed to be the primary cause and effect of the sale AT THAT MOMENT and can REFUSE to pay the collaborating broker their split, no matter how much work the collaborating broker expended to revisit the house with the buyer, to draw up an offer, to negotiate the price and terms, to analyse a comparable market analysis report with the Buyer, to accompany the buyer to the home inspection, to counsel and advise the buyer, conduct due diligence research... all in the best interests of the buyer.

WITHOUT A BUYER'S AGREEMENT, THIS IS THE KIND OF SERVICE EXPECTED TO BE RENDERED BY A COLLABORATING BROKER AS REQUIRED BY CODE OF ETHICS. LEGALLY, HOWEVER, THE COLLABORATING BROKER IS UNDER NO OBLIGATION TO RENDER SUCH SERVICE!

Imagine what effect this has on any collaborating brokers (defined as brokers without a buyer's agreement) in a situation where the LISTING BROKER REFUSES TO PAY THE SPLIT COMPENSATION BECAUSE THE LISTING BROKER DEEMS THEMSELVES TO BE THE CAUSE AND EFFECT OF THE SALE?

THE RESULT: TOTAL DICENTIVE AND LACK OF MOTIVATION - refusal to work for a buye for free.

A buyer's agreement transforms the collaborating broker into a BUYER BROKER with full legal force, with written evidence of primary cause and effect of the sale, with the written intent and preference of the buyer to receive INDEPENDENT REPRESENTATION and even with the right to seek compensation from the listing broker directly stemming from a successful sale in which the Buyer Broker can now more easily prove their cause and effect.

Yes, you read right...to SEEK COMPENSATION FROM THE LISTING BROKER, not necessarily the buyer thanks to a clause pre-written by the real estate authority body into the buyer's agreement (contracts or agreements are primarily pre-written in Quebec for residential properties, never written by brokers - most clauses are pre-written through the real estate authority body that is government run and brokers may then add their own specific clauses in addition to).

This pre-written clause allows:

1. The flexibility for a buyer broker to seek the split from the listing broker directly and to lower the buyer's agreed upon compensation/commission indicated in the Buyer's Contract to Purchase by the amount of the Listing Broker's split indicated on MLS.
2. A more ethical and lower financial burden on the buyer who is making the single largest investment for an individual and removing the buyer's obligation to dish out payment to their Buyer Broker. This has no effect nor impact on the Seller's agreed upon compensation/commission with their Listing Broker. The Seller has already agreed to pay the Listing Broker a set amount and what the Listing Broker does with it is up to the Listing Broker and not at issue with the Seller.
3. The ENDING of a practice in which a listing broker keeps full commission in a situation where the listing broker IS DEEMED NOT to be the primary cause and effect of the sale (ie, listing broker only received the buyer's phone call prior to the signing of an agreement with a buyer broker, opened the door, gave a tour/visit of the house, gave an mls sheet and hoped the buyer would buy - no defining relationship had been established in the buyer's mind at that point especially given a scenario in which the buyer then chooses to seek independent representation.)
4. The ENDING of a practice in which a Buyer paying their Buyer Broker the agreed upon Buyer's Agreement compensation and the Seller paying their Listing Broker their agreed upon compensation. This would have led to a. Both Buyer and Seller paying out 2 separate commissions ; b. Causing unnecessary remorse and strains on the transaction that might risk causing the deal to fail between all parties involved - at the last minute.
5. And LASTLY MOST IMPORTANTLY, it supports the idea that Buyers should be able to freely choose the Broker they want to work without the interference of conflicts
between brokers compensations.

IMAGINE A BUYER'S TRAIN OF THOUGHT WITHIN THIS KIND OF SCENARIO: SEE FOLLOWING POST

IMAGINE A HYPOTHETICAL SCENARIO OF A BUYER THINKING ALONG THESE LINES: THIS APPLIES ONLY TO QUEBEC AND FOLLOWS FROM MY POST ABOVE.

I want to buy a home with my own broker or any other broker other than the listing broker if I so choose and if my preferred broker is unavailable or out of town.

I do not want to deal with the Listing Broker (seller's broker) directly. My interests are simply not being represented legally - I get it, I understand the idea that the Listing Broker is LEGALLY OBLIGATED TO SERVE THE SELLER'S INTERESTS, NOT MINE, ALTHOUGH ETHICALLY HE IS EXPECTED TO TREAT ME FAIRLY...HMMM...SOUNDS CONFUSING.

I might have mistakenly and innocently visited the house through the listing broker because I didn't want to bother my own broker at the moment, and on an impulse, I saw a house, got really excited while I drove by, called the listing agent right then and there due to an emotional gut feeling I just had to get into the door.

I was going to tell my broker anyways later on to represent me if I really liked it enough, or I was going to find another broker with whom I had good chemistry if my broker was out of town.

That first visit with the Listing broker was great - that is the house was great! But I felt overly pushed by the broker - just didn't jive with me - don't want to work directly with the listing broker and anyways, as I told myself before,the broker represents the Seller. Nothing personal, but I simply didn't feel comfortable with the listing broker either.

But hold on, I just found out after speaking with my own broker that I might be stuck dealing with the listing broker by myself because my broker won't be compensated anymore since I visited the house without my broker making first contact on my behalf in the first place, to arrange the visit!

What? Say again?

I'm stuck buying this house with the listing broker??

Who says?

Look, nothing personal, I tried to explain to my broker, I just didn't like the listing broker, the person simply rubbed me the wrong way and I don't want to do business with that person. Why can't I buyer with whoever I want? Why can't I buy through my broker or any other broker but the listing broker?

What?!

Because the listing broker refuses to pay my broker a split - all because I walked through the door on an impulse by myself with the listing broker??

What about other brokers?

the listing broker may decide to REFUSE to pay any other broker who represents me because I already visited the house first with the listing broker? It all depends on listing broker?

You have got to be kidding me!

And obviously my broker won't do work for free no matter how well we get along.

I can't really blame him.

So what gives?

What can I do?

[HYPOTHETICAL STORY CONCLUDES IN NEXT POST BELOW]

CONCLUSION FROM IMAGINE A SCENARIO OF A BUYER THINKING ALONG THESE LINES: THIS APPLIES ONLY TO QUEBEC AND FOLLOWS FROM MY POST ABOVE

I feel trapped.

I feel suddenly as if all my choices are taken from me.

This is totally ridiculous, SURREAL.

Ok, so, I'm beginning to understand this slowly...boy, complicated...my broker explains that the only way this will work is if

A. I do the deal directly with the listing broker without legal representation

OR

B. I sign a Buyer's Contract to Purchase (Buyer's Representation Agreement) with my own broker in which I have to indicate how much I will pay my broker for services rendered, what services I specifically expect with reference to the house of interest.

But I don't feel it fair to pay additional commission especially since the seller is already paying a commission to the listing broker which, under MLS terms, is split to be shared with brokers who bring the deal!

Again, no disrespect intended to my own broker, but my gosh, paying an extra commission in addition to what the Seller's already paying?

None of this makes any sense - it just feels wrong.

My broker further explains that in Quebec, there is a clause pre-written into the Buyer's Contract to Purchase (by the real estate authority body of Quebec) that specifically says that my Broker can seek the split portion directly from the Listing Broker's compensation and that this would have the effect of reducing the commission amount I would have paid my broker down to 0 in my specific case...I guess this doesn't apply to everyone because my broker said he/she would only charge me the amount of the split indicated on the mls sheet. Well, that sounds fair enough.

(since my broker would have charged me 2.5% under the agreement and the split on the mls sheet is 2.5% that the listing broker would have paid my broker, mine would be diminished to zero - got it! That makes sense and sounds fairer).

Okay...that sounds more promising. But what if the listing broker still refuses to pay the split...I'm still stuck footing the bill on my agreement to my broker!

My broker further explains that should the Listing Broker still refuse, that this woul not be my problem and I should not concern myself. In addition, my Broker said he would sign an additional promise in writing stating that the agency nor the broker would pursue me, the Buyer, for compensation, should the Listing Broker refuse to split commission.

That's very reassuring. If my broker is willing to put that in writing, I'll sign the Buyer's Contract to Purchase Quebec to make it clear what my intentions are, to make sure I see the commission/compensation indicated in my agreement matches the Published MLS split amount provided by the Listing Broker to ALL BROKERS bringing offers/promises to purchases.

But I do want that additional written guarantee put in writing that if the Listing Broker, for whatever reason, refuses to honour the split, that I will not be pursued by my broker or my broker's agency to pay up my agreed compensation!

I guess I learned something new this time: I won't visit a house of interest with the listing broker directly unless I really don't want or don't need independent representation. I also learned it might simplify things if I simply call my own broker and ask my broker to arrange all visits if I am uncomfortable with the Listing Broker or if I simply want to be represented independently in the deal. I also learned that brokers without an agreement, also known as COLLABORATING BROKERS, are indeed required to treat me fairly under code of ethics, hmm...that's still a confusing one, but that legally they are not legally bound to represent my best interests in a negotiation, rather it's implied that they are bound legally through the Listing Broker to the Seller? Wow, confusing!

Hey, I appreciate my broker trying to explain this stuff to me using very precise real estate terms, but that whole aspect of real estate is just too complicated to understand fully. Heck, I even asked a real estate lawyer to decode this stuff, and even the lawyer used all sorts of technical precise words to explain it all safely to me. I was just as confused!

Whatever the case, I want a say, a choice in the matter.

So I'm going for the signed Buyer Contract to Purchase with that extra indemnity clause guaranteeing I won't be persued for the compensation if the Listing Broker refuses to share their split with my broker.

To simplify my life, minimize confusion and minimize risk to myself, this is the way to go.

The advantage is more to the agent where when you sign the contract, you are officially working with that agent. It does protect you in writing against unscrupulous agents trying to claim that they were the first agent to work with you and try to get part of or the whole commission on a home you buy. They will be much more aggressive when dealing with you.

I do not use the BRA myself when working with buyers. I do work hard to find my clients a good home and love working with people. When you give a good service, clients will work with you until they find the right home.

YOU AS THE BUYER WILL BE EXCLUSIVELY REPRESENTED BY AN EXPIERENCED ASSOCIATE WHO WILL LOOK AFTER YOUR BEST INTERESTS WITH INTEGRITY AND PROFESSIONAL EXPERTISE

It is a formal agreement between the Buyer and the Real Estate Broker who will fully look after your best interest in the real estate market within a specific timeframe. This is a legal document that protects you as a Buyer and your Real Estate Broker.

Lina Castro,
Your Real Estate Broker
Adresz Reseau Immobilier
Castro, Your trinlingual real estate services, in English, French and Spanish with fidelity and integrity!
Phone: 514-458-9153
E-mail: linacastrosells@hotmail.com Just one e-mail away from you!
I am never too busy for your referrals in Montreal, QC Canada.

Put very very simply, the benefit of signing a BRA is so you get advice from your realtor. If you are a "Customer" the realtor is not allowed to give you advice. If you are a client, he is allowed to give you advice and will watch out for your best interest.

Also, just to give a little example of the benefit, say an agent has 1 "Customer" and 1 "Client" looking for the same type of house. He/she is legally obligated to show the client the house first and if the client doesn't want it, then he can show it to you. Point being, you can miss out on the best properties if you aren't signed up on a BRA. *Has to be a good agent of course. Doesn't matter what you sign, if you don't find the right person you will most likely be at a disadvantage in your search

UPDATE ON MY POST REGARDING BRA AND QUEBEC:

Interestingly and ironically, the Quebec real estate regulations were just recently updated!

A Collaborating Broker is now replaced with BUYER'S BROKER
A Listing Broker is now replaced with SELLER'S BROKER

All this to remove the public's confusion as to who is supposed to represent whose interests.

The collaborating agent’s mandate was to find buyers for the listing agent. As he was generally paid from the listing agent’s brokerage contract (as it is still the case today), he or she became somehow the subcontractor to the contract. This situation may lead us to believe that the client of the collaborating broker was the seller.

Therefore, the buyer had the right to wonder:

Who is the client of the collaborating agent with whom I am dealing?
Is it me, who sought his services, or is it the seller, since the agent collaborates to the main brokerage contract?

it became clear that the listing broker represents the seller and that the collaborating broker represents the buyer, whether there is a brokerage contract to purchase or not.

Since the buyer’s broker or seller’s broker can no longer make any representation that goes against the party he or she represents nor disclose confidential or strategic information regarding his client unless there is a written authorization, there is no reason for not simply using seller’s broker and buyer’s broker designations.

Sooo, that slightly changes certain aspect of my previous posts, however, bottom line is a buyer's contract to purchase still offers great benefits under specific circumstances.

The simplest way to put it in regular terms is this:

You are out at the mall shopping for the most valuable item you have ever bought. Let's say its a ring. The sales person behind the counter, shows you the ring and provides you with customer service to help you with your purchase. At the end of the day, that sales representative wants to make the sale and they are working for the store and NOT YOU. They are not obligated to look out for your best interests, simply to provide you with customer service.

A Buyers Representation Agreement outlines obligations and duties the agent has towards their client, YOU. They look out for your best interest at all times. They do this because there is an agency agreement in place that solidifies the relationship between you and them. In the case of the ring above, they would tell you if the ring was overpriced, show you others to compare it to, and give you ALL the information you need to make the RIGHT choice for the largest purchase of your life. They will let you know if this ring is the best choice for you at the best terms.

Good agents put alot of time and effort into helping their clients with their purchase. If there is no BRA, some agents will not work with buyers because the level of commitment is not there. With a BRA in place, the hard effort and work will be compensated. Without a BRA, there is no gaurantee of compensation and some agents will not waste their time.

Compare it if you will to hiring a contractor who does good work and in high demand. They will not start a job without a contract because there are man hours, planing and only so many hours in the day, and days in the year to earn a living. A contractor who is not in demand, who's work may not be as good, will take any job they get, and may work without a contract.

Which contractor do you want to work for you?