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Penn Oak Realty recently continued its Real Estate Minute series on The Home Page Network with an important discussion about Buyer Agency Contracts—a key part of the homebuying process that many buyers don’t fully understand.

Broker and owner Dawn Avery, with offices in Wellsboro and Mansfield, was joined by Misty Gardner from Penn Oak Realty’s Wellsboro office to walk viewers through the two types of Buyer Agency Contracts used in Pennsylvania: the Exclusive Buyer Agency Contract and the Non-Exclusive Buyer Agency Contract.

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What Is a Buyer Agency Contract?

A Buyer Agency Contract establishes a professional relationship between a homebuyer and a real estate brokerage. When a buyer chooses to work with a licensed buyer’s agent, that agent owes the buyer duties of loyalty, confidentiality, and acting in the buyer’s best interests.

Without a buyer’s agent, a consumer does not have a real estate professional legally obligated to protect their interests during the transaction.

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The Exclusive Buyer Agency Contract

The Exclusive Buyer Agency Contract is a four-page document that outlines the responsibilities of both the buyer and the brokerage.

Key Points at the Beginning of the Contract

At the start of the agreement, buyers are informed that:

• A buyer’s agent must act in the buyer’s best interest

• The buyer agrees to work exclusively with one brokerage for a specific period of time

• Purchasing a property during that time may result in a broker’s fee being owed

• Working with multiple agents could result in fees owed to more than one broker

Buyers are strongly encouraged to read the entire document carefully and to ask questions of the agent, broker, or a Pennsylvania real estate attorney before signing.

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Brokerage and Buyer Information

The first page also includes basic information such as:

• Brokerage and agent details

• Buyer names and contact information

An important detail many buyers overlook is that the agreement is with the broker, not just the individual agent. If the agent leaves the brokerage, the contract remains valid with the company.

Buyers are also asked whether they currently have a buyer agency contract with another broker. This is critical, as signing multiple agreements can lead to serious financial consequences.

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Contract Dates and Length

The agreement includes both a start date and an end date. While the contract may last weeks, months, or even up to a year, it automatically ends once settlement occurs.

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Broker’s Fee and Compensation

Another major section of the contract explains the broker’s fee, which is how the brokerage and agent are paid.

• The broker’s fee is negotiable between the buyer and the broker

• Many brokerages have office policies that guide compensation

• Agents must follow brokerage policy and may need broker approval to negotiate fees

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Can the Seller Pay the Buyer’s Agent?

Yes — and this often happens.

In many transactions, the seller agrees to contribute toward the buyer’s broker fee. This can occur in two ways:

1. The seller offers a set amount to buyer agents when listing the property

2. The buyer requests that the fee be included in the sales agreement

If the seller does not agree to pay the buyer’s broker fee, the buyer becomes responsible. This may be paid out of pocket or, in some cases, financed as part of the purchase.

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Agency Relationships and Confidentiality

Page two of the contract also explains:

• Dual Agency

• Designated Agency

• The brokerage’s ability to work with other clients

A critical section addresses confidentiality. The broker and agent are legally required to protect the buyer’s confidential information — and this obligation continues even after settlement and after the agreement ends.

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Additional Disclosures and Warnings

The remaining pages of the contract cover several important topics, including:

• Deposit money and how it is handled

• Civil Rights Act notices

• Megan’s Law disclosure

There are also two important warnings:

• Properties are sold in their present condition, and buyers are encouraged to obtain professional inspections

• Recording devices, such as cameras or audio equipment, may be present in properties

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The Real Estate Recovery Fund

The final page informs buyers about the Real Estate Recovery Fund, which is also outlined in the Consumer Notice. Buyers are once again advised to consult a real estate attorney if they have legal questions.

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What About the Non-Exclusive Buyer Agency Contract?

The Non-Exclusive Buyer Agency Contract is similar in structure, but with one major difference:

The broker represents the buyer only for properties that the broker or agent has shown or introduced to the buyer.

This form is often used:

• When an agent and buyer first begin working together

• When buyers are searching in areas outside the brokerage’s normal coverage area

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Final Thoughts

Buyer Agency Contracts contain a great deal of important information, but understanding them helps protect buyers throughout the homebuying process.

If you have questions about buying or selling property—or about the forms and contracts used by REALTORS®—you’re encouraged to contact Misty Gardner or any of the agents at Penn Oak Realty.

Penn Oak Realty – Wellsboro Office
65 Main Street, Wellsboro
Office: 570-724-8000
Cell: 570-439-6444
Website: PennOakRealty.com

Thank you for joining Penn Oak Realty’s Real Estate Minute on The Home Page Network.