Changes are in the wind once more for Alberta Real Estate Agents and real estate buyers. Effective July 1, 2014 all Real Estate Brokerages are required by law, to have written Service Agreements with all buyers. Currently, only brokerages who operate under the Designated Agency model have been required to have these on file as of February 1, 2014. The term of agreement can be whatever is agreed upon by the parties.
Among the many protections which are afforded to the buyer under these agreements, most notably the nullification of any possible conflict of interest the agent may have with the buyer, the Exclusive Buyer Representation Agreement also has provisions for the benefit of the agent, one of which includes the payment of a retainer, which is held by the brokerage most commonly paid back to the buyer once they purchase a property. Otherwise it may be fully or partially paid to the agent if no transaction occurs, under the specific terms of the agreement. If a transaction does occur then the agent is typically compensated through the seller’s brokerage.
This is a welcome addition to previous Representation Agreements for Alberta agents who often spent weeks driving clients around, only to learn that their buyer was just “window shopping”, or just got bored with the process and then decided to go with someone else at the last minute.
During this time, the agent may well have lost out on other “paying engagements” as a result of they’re being unavailable for other more serious buyers. This can have a very serious effect on the the agents bottom line. There are only so many hours in a day and most agents work day and night to assist their customers and clients.
The retainer can provide some additional motivation because the buyers know that if they don’t end up buying something before the expiration of the agreement, the agent may be compensated for all their hard work. This is a definite motivator to anyone who is not all that serious about purchasing. While most buyers do eventually buy something, there are a great many that do not. This can be a big drain on our resources, and finances, especially when we have more than a full day’s travel/labour invested into the buyer. What business can afford that kind of drainage?
Buyers can expect that in future, more and more agents will require that they be paid for the time they invested when a buyer decides to go sideways on them. It will be more important than ever to ensure that buyer’s are pre-qualified for their mortgage before they start calling up agents to view properties.
For very short term engagements, a Non-Exclusive Buyers Representation Agreement might be perfectly acceptable.
Please follow the link for more information on Buyer Representation Agreements.