Do I have To Sign Something As a Real Estate Buyer in Virginia?
Are You Being Asked To Sign An Agreement Before Seeing A Home?
So, you’ve probably heard from a real estate agent that you need to sign an agreement before they can show you a home or work with you. Yep, they’re not just being difficult – they’re following the rules. Agents need a signed agreement to show you properties or write offers. Think about it: do you really want to work with someone who’s okay bending the rules right from the start?
In the real estate world, this is called “Agency.” By law, agents must disclose who they represent in any transaction or service offering. Since 2012, Virginia law has required that this consent be in writing before any substantial discussions about buying a home or making an offer. The Realtor Association provides standard forms to help agents make these disclosures, although brokers may also have non-standard forms that they use for their firm.
Will I Have To Pay Your Buyer Agent?
A series of lawsuits led to a big change in the real estate industry. The suits alledged that agents were not being transparent enough in how they were being compensated and that it was unfair that the seller was generally the one required to do the compensation for the buyer’s representative. Although most agents have always been clear about these issues, the National Association of REALTORS settled to make sure all real estate agents in the multiple listing service (MLS) negotiate directly with the buyer for their compensation. This means sellers are no longer required to offer compensation unilaterally to a buyer’s agent. A seller may offer some concessions to cover part or all of the buyer agent’s compensation as a condition of the buyer purchasing the seller’s property. Now, buyer and agents who are members of the MLS, must negotiate and document their compensation agreement before entering a property or making offers. The Department of Justice has also stepped in to ensure transparency in who pays whom in real estate transactions. By late August 2024, these new practices will be fully in place, requiring a signed compensation agreement between the buyer and the buyer agent’s firm before any property showings.
The Benefits Of The Buyer Agency Agreement
To get this agreement in place, a buyer agency agreement will be signed. This covers not just compensation but also allows the buyer’s agent to negotiate their fees with the seller as part of the offer.
Other mandatory disclosures will include Fair Housing laws, Virginia property disclosures, and more. These are crucial for you to understand before viewing properties or making offers. The National Association of Realtors’ settlement and DOJ requirements mean a buyer agency agreement is necessary before an agent can show you a property or write an offer – a practice Virginia has followed since 2012.
When signing these agreements, remember they don’t have to cover long periods or broad services. They can be specific to one home or just a weekend of house hunting. All commissions between you and your agent are negotiable and must be agreed upon in the buyer agency agreement. The compensation that you and your agent agree upon in the buyer agency agreement will be the cap of what an agent can collect. This agreement will also allow the buyer agent to attempt to negotiate with the seller and attempt to get the seller to contribute to some or all of the compensation you and the agent have agreed upon.
These agreements also define what your agent can and can’t do, detailing their responsibilities and the extent of their negotiation powers on your behalf. Buyer agency agreements provide several benefits and are now a required part of the home-buying process.
Negotiate and Understand What Your Signing
I know that this is a change to a nearly century-old practice and its going to take some getting used to for all involved, but the requirement to have agreements fully explained to you and signed are in the buyer’s best interest. Make sure you ask a lot of questions and get clarity on how your agent will be assisting you and how they anticipate being compensated. Just like you were clear on what you were getting paid before you accepted your last job, an agent will also will want to know how they will be compensated for the work that they do.
You should ensure that you get clarification on each paragraph and not just focus on compensation. There is a lot of moving parts in a real estate transaction and your agent will be your trusted guide in the process.
If you are looking to buy or sell a home in Virginia, please feel free to reach out to me and allow me to explain the process and how I can be your partner in guide in one of the largest investments you’ll make in your life.
