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Signing legal contracts. Not on most people’s list of favorite things to do, but in a real estate transaction you will sign many contracts leading up to and during the closing. In Georgia, we use form documents drafted and provided to us by the Georgia Association of Realtors. There are individual modifications that may be made, but for the most part they are “forms”. The first form a home buyer will encounter is the Buyer Brokerage Agreement.
Let’s take a look at what it is and what it means. The first thing to note is that it’s an “exclusive” buyer’s brokerage agreement. That means that you are only entering into such an agreement with one Realtor; you cannot enter into multiple “exclusive” agreements. The form explicitly states that if you have entered into other such agreements, they must be expired or you must terminate them – in other words, you are representing that they are no longer in force. (There is also a NON-Exclusive Buyer Brokerage Agreement, but most Realtors will work with you on a continuing basis only if you have agreed to work with them exclusively).
While the contract refers to “Broker” it also relates to the individual Realtor. We Realtors are agents working under a Broker – and so when there is reference in the contract to “Broker” you can also read that as “Realtor” or agent, and those terms are used interchangeably in this article.
You will see that the agreement also states that Georgia Law, code section 10-6A-1, prohibits a Broker from representing a buyer without this agreement in place. Therefore, before I place on offer on your behalf, I must have this brokerage agreement signed. Otherwise I cannot act as your agent. There’s also a “term” to the agreement. After the ending date, the parties are no longer bound by the agreement. But even before the end date in the contract the agreement may be terminated by either party simply by written notice to the other. If that happens, your only obligation as a buyer would be to notify the Agent if you purchase a property you have viewed with or through the Agent so that they can collect a commission on that property.
The agreement obligates the Broker to attempt to identify properties for Buyer to purchase. Note the word “attempt”. Sometimes the Buyer themselves will find a property either online or by driving by; but a Buyer under a Buyer’s Brokerage Agreement is still obligated to go through the Buyer’s Broker to see, consider, and make an offer on that property. It’s important to note that identifying a property to purchase is not the Buyer’s Broker’s only or even sole obligation. The Buyer’s Broker has a fiduciary duty to protect the Buyer’s interest during the process of purchasing a home. Identifying the property to purchase is only one small step in that process.
While obligated to make all disclosures “required by law”, the Realtor is expressly NOT allowed to make representations with respect to the race, color, religion, national origin, sex, familial status, disability, sexual orientation or gender identity of a given neighborhood or community. Notice that AGE is not mentioned in this paragraph. In certain instances, it is all right for Brokers to talk about age restricted communities. For instance, there are “active adult” communities in which residents must be over the age of 55.
What about liability for commission? In Georgia, the Seller pays commissions of both agents – the listing agent and the buyer’s agent. This obligation is contained in the form listing agreement signed by Sellers and is reflected in the Buyer Brokerage Agreement, under which the buyer is not obligated to pay a commission ever unless expressly set forth in the buyer’s brokerage agreement, or if a FSBO, or For Sale By Owner, refuses to pay the Buyer’s Agent.
The Agreement also provides for dual and designated agency. Designated agency is common and occurs when two Realtors working for the same Broker are both working on a deal, one representing the buyer and the other representing the seller. Generally there is no cause for concern, since both agents are obligated to protect their party’s best interest. But what about when only ONE agent is involved? It is not impossible for the Listing/Selling Agent to represent the buyer as well as the seller. The type of relationship created here is known as a dual agency and as long as the Listing/Selling Agent fully discloses the dual agency and obtains the written consent of both parties, he or she may represent both the seller and the buyer.
Georgia law provides very specific and strict disclosure of the nature of the dual agent’s role and deals harshly with agents who do not follow the prescriptions, including a description of the types of transactions involved, a statement that the agent will be representing parties whose interests are potentially adverse, that all material information will be disclosed to both parties, and that the client voluntarily consents to the dual agency.
The Buyer Brokerage Agreement, like many real estate forms in Georgia, contains an arbitration provision requiring the parties to arbitrate any disputes arising from the contract. It also mentions several consumer protection brochures that should also be provided to the buyer:” Protect Yourself When Buying a Home” and “What Buyers Should Know About Flood Hazard Areas and Flood Insurance”.
When you have signed a Buyer Brokerage Agreement, you are embarking on a mutual adventure with your Realtor. You not indentured to that agent, and if things are not proceeding as you wish there is no shame in terminating the Agreement; but first see if you can work things out with your Agent by letting them know what you need and what you feel you are missing. Home buying is a life changing process and you need a committed advocate on your side!
Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.
A reporter working on a story recently contacted me and wanted me to give my opinion on the “BEST” neighborhoods for a given type of buyer in a given price range. Unfortunately, I can’t know that without knowing the buyer. Not only WHO you are (first time homebuyer, young family, aging empty nester), but also your personality. Your personal traits and also your architectural personality. Do you like historic bungalows, sleek modern houses, or traditional homes with gorgeous molding and impeccable finishes? With any personality and price range, there are numerous neighborhoods which might fit the bill. What you need is the Realtor who will get to know YOU and help you find the right house in the right neighborhood at the right price. I’m going to share with you some insights I recently gave to a writer for Atlanta magazine who asked me to GENERALIZE on the best neighborhoods for a given demographic in a given price range… but keep in mind that it ALL DEPENDS ON THE BUYER.
(Picture from the Austell, Georgia website – image of the 500 year flooding in September of 2009)
Atlanta Real Estate Wisdom 