Buying a home or investment property is a major financial milestone. Whether you’re a first-time buyer looking for a cozy starter home or an experienced investor on the hunt for your next opportunity, having a clear understanding of your rights and responsibilities is crucial. One tool that can help you navigate the real estate world with confidence is a buyers agreement.

But exactly what is a buyers agreement? And why is it important for buyers to understand this document before signing? In this guide, we’ll walk you through everything you need to know—what it is, what it covers, why it matters, and how to make the best decision for your real estate goals.

Understanding the Basics: What Is a Buyers Agreement?

A buyers agreement—also called a buyer representation agreement—is a legal contract between a real estate agent and a homebuyer. This document formalizes the working relationship between you (the buyer) and the agent, detailing how both parties will work together during the property search and purchase process.

The purpose of the agreement is to set expectations upfront. It outlines how your agent will assist you, how long the arrangement will last, whether the agreement is exclusive, and how the agent will be compensated. It also affirms that the agent is working in your best interest, not the seller’s, which can make a big difference when it comes to negotiating and closing the deal.

Many buyers are surprised to learn that real estate agents technically work for the seller unless a buyers agreement is in place. By signing this agreement, you’re establishing loyalty and trust—something that can help avoid confusion or conflicts later in the transaction.

What Does a Buyers Agreement Include?

A comprehensive buyers agreement typically covers a variety of details that protect both you and the agent. Here are some of the most common components:

1. Length of Agreement

The agreement will state how long the agent will represent you—this could be for a few weeks, a few months, or longer depending on your timeline. You can negotiate this term if needed.

2. Exclusivity

Some buyers agreements are exclusive, meaning you agree to work solely with one agent. Others are non-exclusive, allowing you to work with multiple agents. Always read this section carefully.

3. Agent Duties

This section outlines the agent’s responsibilities, such as helping you find properties that meet your criteria, scheduling tours, preparing offers, providing market analysis, and guiding you through negotiations and closing.

4. Your Responsibilities

The agreement may also ask you to be honest about your budget, communicate your preferences, show up for scheduled showings, and provide any financial pre-approval documents required to move forward with offers.

5. Compensation Details

While the buyer’s agent is often paid a commission by the seller’s agent at closing, the agreement may outline other potential fees. Understanding the compensation structure helps avoid surprises.

6. Termination Terms

In case either party wants to end the relationship early, the agreement will specify how that can be done and whether there are any cancellation fees.

Knowing what’s in the contract ensures that your working relationship with the agent is smooth and professional from the start.

Why a Buyers Agreement Matters in Real Estate Transactions

So why does a buyers agreement carry so much weight in a real estate transaction?

First and foremost, it creates a legally binding relationship between you and the agent. This means your agent has a fiduciary duty to act in your best interest, providing transparency, honesty, and loyalty throughout the process.

In a market where timing and strategy are crucial, a buyers agreement incentivizes the agent to prioritize your search. Agents are more likely to dedicate time and resources to clients with signed agreements because it signals commitment on both sides.

Moreover, this agreement protects you from miscommunication or disputes. Everything from compensation to expectations is spelled out in writing. This clarity becomes especially important if negotiations get tough or if the purchase becomes complex.

For buyers who are new to real estate, having someone who’s legally bound to support you can provide peace of mind and a sense of empowerment throughout the journey.

Pros and Cons of Signing a Buyers Agreement

Like any legal agreement, there are benefits and potential drawbacks to signing a buyers agreement.

Pros:

• Dedicated Representation: Your agent is committed to working in your best interest, not the seller’s.

• Clear Communication: Everyone knows what’s expected, reducing the risk of misunderstandings.

• Access to More Properties: Some agents may give priority access to listings or pocket listings when working with committed clients.

• Strong Negotiation Support: A loyal agent will go the extra mile to get you the best deal.

Cons:

• Less Flexibility: If you’re not happy with your agent, being in a binding contract can make switching more difficult.

• Possible Costs: While rare, some agreements may include fees if the purchase doesn’t close or if you buy without the agent.

• Time Commitment: Signing for a long term can feel restrictive if you’re unsure about working with a specific agent.

Ultimately, the best approach is to have an open conversation with the agent, review the agreement in detail, and ensure you feel comfortable before signing.

Tips Before Signing a Buyers Agreement

Here are some smart tips to help you make an informed decision before putting pen to paper:

Interview Multiple Agents

Don’t feel pressured to sign with the first agent you meet. Compare experience, communication styles, and market knowledge.

Ask About Flexibility

See if the agent is willing to adjust the term length or remove exclusivity clauses.

Start with a Short-Term Agreement

A 30-day agreement can be a great trial period to see how well you work together.

Review the Termination Clause

Make sure there’s a fair way to end the agreement early if needed.

Understand the Fine Print

Ask about compensation structures and make sure you know what’s expected from both parties.

Be Honest with Your Agent

Let your agent know if you’re interviewing others or if you have specific needs—they’ll appreciate your transparency.

Conclusion

Understanding what is a buyers agreement and how it affects your real estate experience is essential. Whether you’re buying your first home or your fifth investment property, this agreement can serve as the foundation for a professional, productive relationship with your agent. It ensures your best interests are protected and gives both parties a roadmap for working together effectively.

And if you’re serious about diving deeper into real estate, it helps to have guidance beyond your agent. That’s where Dwanderful comes in.

Dwanderful isn’t just a website—it’s a powerhouse of real estate knowledge. Led by expert investor and podcast host Dwan, the site offers invaluable tools to help buyers and investors succeed. Dwan generously offers a free book titled “Real Estate Lingo”, perfect for getting up to speed on the terms you’ll hear throughout your journey. For a deeper dive, her paid book “Five Pillars of Real Estate Investing” lays out the proven methods she’s used to build wealth in real estate.

And if you’re curious about your own potential, don’t miss out on Dwanderful’s fun and quick quiz game. In just under a minute, you’ll discover how you could generate six figures in the next six months—whether you’re buying your first home or scaling your real estate portfolio. It’s insightful, empowering, and could be the first step toward transforming your financial future. Contact us now!

Frequently Asked Questions:

Can I work with multiple agents if I sign a buyers agreement?

If you’ve signed an exclusive buyers agreement, you’re typically committing to work with just one agent during the contract period. However, if it’s a non-exclusive agreement, you may have the flexibility to work with others. Always check the specific terms before proceeding.

Do I need to sign a buyers agreement to work with a real estate agent?

Not always. Some agents will work with buyers without a signed agreement, especially early in the process. However, agents may prioritize clients with agreements in place because it formalizes the relationship and protects both parties.

Is a buyers agreement legally binding?

Yes, once both parties sign, the buyers agreement becomes a legally binding contract. Make sure to review it carefully and don’t hesitate to ask questions or request changes before you sign.