What is Buyer Brokerage?

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by Kelley Skar

Buyer Brokerage – A Commitment Agreement

What exactly does the term “Buyer Brokerage” really mean in Canadian real estate? In the most basic definition that I can come up with, I would say that it is a contract between the Buyer’s Agent and the Buyer.

As soon as you see the word “Contract” I am sure that you get your back up immediately; I know I would if I were a buyer.

My initial reaction to “Buyer Brokerage” or the word “Contract” if I were not in the business, would be that of fear and anxiety. However, now that I am in the business I see that these terms and types of agreements are not being explained very well by the industry.

How Buyer’s Agents Earn their Dollar

I know as a buyer you may think that using a REALTOR® is necessary to make a purchase off the MLS® and you would be right.

Here is a brief run down on how we earn our commission:

  • Meet with you, the Buyer, to determine your needs and wants
  • Show you multiple properties until we find you the PERFECT home
  • Write the offer – get it accepted at the price you are willing to pay
  • Offer access to our team members, be it lawyers, home inspectors, mortgage brokers etc.
  • See you on possession day to give you a gift, a handshake and a Congratulations on your new home

Seems pretty easy right? So what if you are the Agent in this scenario? Put yourself there briefly as I explain the flip side of this hypothetical:

  • Meet with the Buyer Needs and Wants determined
  • Show them multiple properties until you find the right one
  • Open house at that property on the weekend and the buyer attends
  • Said buyer writes the offer with the listing Agent instead of you
  • What have you lost?

The loss here is more than just a commission check. You have lost your time away from your family, you have lost a good amount of information you have given to your client(s) and you have lost some energy as this type of thing will sap you when your “Client” calls you to tell you the “Good” news that they bought that house that you showed them.

Still sound pretty easy?

Enter Buyer Brokerage

Did the example above ever occur to, you, the Buyer? Could you see then how a buyer’s commitment agreement could have maybe solidified your relationship with the hypothetical buyer?

Unfortunately, this type of thing happens a lot in our industry. I think part of the reason is that buyers have no real understanding of how we earn a living.

Part of what a commitment agreement does is outline my responsibilities as your REALTOR® but also it outlines your responsibilities as a buyer. Is there money attached to this type of agreement up front? Well that is up to you and your REALTOR® to decide.

There is another way to do it and that would be if you do not stick to the agreement and decide to make a purchase without being represented by YOUR Agent, you would ultimately be responsible for paying your REALTOR® the agreed upon amount.

Ok, I know it sounds greedy, but put yourself in the place of the Agent in the scenario I played out for you above. Would you want to spend a ton of time and energy as well as time away from your family to NOT get paid at the end of the day?

How would you feel if you went to work on Monday morning and your boss said to you, “I want you to work here for a month, put in a lot of overtime, buy everyone coffee or lunch on a regular basis and NOT get paid for it!” What would your answer be? Do I have to guess?

Buyer Brokerage and How it is Structured in the Buyers Favour

To give you an idea how the agreement is in the buyer’s favour, let me tell you that there are over 20 obligations set out in the contract that the REALTOR® owes the purchaser.

The buyer’s responsibilities to the Agent totals 7. Seven – that is it. What do they say? Well, money comes in for sure but it also states that (paraphrasing):

  • Communication is key, including, identifying all the properties you would be interested in seeing
  • Offers to sell to the buyer by interested sellers i.e. Open House or For Sale by Owners
  • Informing the Agent or Brokerage of any change in information, for example: your Pre-Approval amount

In my opinion, at the end of the day, a commitment agreement between the buyer and the Agent should NOT be a scary thing from the buyer’s perspective. If anything, there will be a greater understanding of your role and my role as your REALTOR® during the purchase process.

As you have seen repeatedly throughout this post I have referred to “Buyer Brokerage” not as a contract (which it clearly is), but as a commitment agreement…I firmly believe that is what it is.


About the Contributor

Kelley has consistently been in the top 5% in sales since he started full time in the real estate industry in 2008. He went through a major shift in his marketing plan at the end of 2009, recognizing the trend, and making the move towards digital marketing including websites, video, blogging and social media. Kelley is incredibly passionate about the use of technology and social media in his business and is often sought out for advice from other Agents from across North America. Kelley’s primary websites are: http://nwcalgaryliving.com and http://kelleyskar.com.

To connect with Kelley through Social Media follow him on twitter.com/kelleyskar and on Facebook.com/kelleyskar. If you have questions or comments you can reach Kelley direct at [email protected].

About Aaron Joshua Barroso

Marketing at Zoocasa, Brokerage.

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