Posted on: 14 March 2017
When you hire a realtor to help you buy a home, he or she will typically have you sign a buyer representation contract outlining your respective obligations. These contracts often contain quite a few clauses, some of which may not be in your best interests in certain situations. Here are two clauses you should be wary of agreeing to.
You Must Stay With the Firm
Not all realtors work for themselves. Many actually work for brokerage firms that handle a variety of real estate transactions (e.g. titling, home inspection) and properties (e.g. residential, commercial). Hiring a realtor who works with a brokerage firm can be immensely beneficial, because you will often gain access to resources that make the process easier and faster.
However, there is one drawback that may have a negative impact on your purchase. If your real estate agent leaves the firm, you may be required to stay with the company and continue your purchase with a different agent. This may not be an issue if you're in the beginning stages when you still looking at homes.
On the other hand, it may be a real problem if you're actually in negotiations with the seller to buy the home where trust and knowledge is necessary. There may be a delay as the new agent gets caught up on the situation and/or the seller may take advantage of the confusion in the abrupt change and try to get more money.
If you have any reason to believe your real estate agent may not be around for the entirety of the transaction, you may want to negotiate this clause out of your contract or switch to a more stable agent.
You're Required to Pay an Administrative Fee
Another clause that may appear in the buyer representation contract is you may be required to pay an administrative fee. This fee is typically charged to cover additional costs associated with your purchase, such as Errors and Omissions Insurance and the price of storing your paperwork for the length of time required by the IRS and other government entities. This fee can be as much as $500 and must be paid in addition to any commission earned by the real estate agent.
Sometimes you can negotiate this fee out of the contract. What you really have to be wary of, however, is a clause requiring you to pay the fee regardless of whether you actually close on the home or not. It goes without saying that you should not agree to pay a commission on a transaction that doesn't go through.
For more information about buyer representation contract clauses or help finding the home that's right for you, contact a real estate company such as Jeff Glover & Associates Realtors.Share