Follows are ideas that might improve your Buyer Representation contract.
They are not intended to be comprehensive or replace the advice of legal counsel (which we do recommend that you obtain). These clauses may be added together as an addendum or separately to your contract. Please consult a lawyer before inserting any of these clauses into your contract. CAARE assumes no responsibility for the use or misuse of these ideas. Please hire an attorney!
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1. The following clauses take precedence and supercede any conflicting terms that exist in the listing contract that You provided to me.
2.You shall NOT engage in dual agency or designated agency (also called multiple representation arrangements) – both are conflictive relationships that are harmful to the client and obstruct the purpose of this contract. You WILL NOT ask me to sign any multiple representation arrangement consent forms. Any written multiple representation consent forms that you have gotten me to sign WILL NOT be used as evidence against me to show that I gave my informed consent to multiple representation. If a multiple representation situation arises, you will refer me to another broker and withdraw from this Agreement and continue to represent my best interests. This Agreement will take precedence over all multiple representation consent forms including those executed subsequent to this Agreement. Your duties to me shall survive this contract and the closing of the property.
3. If the Licensee/Salesperson leaves the Brokerage Firm, I have the option of immediately terminating this contract.
4. You (broker) will be paid (select one) ________ % of the purchase price or $__________ as a flat fee (strike payment method not used). Compensation only becomes payable upon a succesful closing and you fulfilling all your duties to me. This is your only compensation and I do not agree to pay you any additional commissions, fees, or administrative fees identified in your contract. If the listing broker is offering more than the amount referenced above, then the remainder (including any bonuses) will be paid to me or used to lower the purchase price of the house. I will disclose any moneys received to my lender in a timely fashion. If the listing broker is offering less than the amount referenced above, then you agree to accept that amount as your total compensation. Prior to showing me any properties, you agree to inform me of all compensation that is being offered to you to by the listing broker.
5. You (broker) will not recommend to me any ancillary or affiliated services or products like appraisal, title insurance, closing, legal, home inspection, home warranty or other services. Instead, if you feel such services or products are of benefit to me, you will diligently research and compare third party providers on my behalf and make recommendations to me of providers that are not affiliated with your firm or you.
6. You (broker) will not attempt to place a lien on my title or my proceeds in order to collect your compensation.
7. You (broker) are NOT authorized to collect or pay any referral fees in my transaction or receive any other compensation offered to you (Broker or Agent) by anyone else related to this transaction unless such fees are immediately disclosed, collected and paid to Me.
8. You (broker) will NOT ask me to sign an Aribitration or Mediation Agreement with You or the Seller. You will NOT provide me legal advice on this topic.
9. You are not authorized to receive any other forms of compensation other than the one commission or flat fee described above. For example, neither you, nor any of your affiliates, shall collect any fees for filling out a home warranty application, selling me title insurance or referrals. If you violate this clause and disobey these directions, you agree that such act will constitute self dealing and that at a minimum you agree to forfeit your entire fee.
10. You agree to verify the lot dimensions and the square footage measurements (of building and rooms) prior to any drafting any purchase agreement.
Notes on Clauses:
1. Prior to inserting any of these clauses, you will likely want to make sure that these clauses take precedence over conflicting terms in the contract. Again, please do verify this with a local attorney.
3. Most listing contracts obligate you to stay with the brokerage firm even if your agent moves to another firm.
4. Many brokers insert a clause into the boilerplate of their listing contracts that calls for an added fee to be paid to them. It is often called an Administrative Fee or Additional Commission or some other term and can often exceed $300. Brokers who refuse to waive this fee should be avoided. Also, many brokers call for their fee to be due and payable upon procuring a ready, willing and able buyer (even if the transaction does not close). Buyers should never agree to owe a commission unless the transaction actually closes.
5. In an effort to “capture” all aspects of your business, many brokerage firms have created ownership interests in safeguard services. Brokerage firms have a large financial interest in making sure your transaction closes and have created these affiliations to compromise those safeguards and eliminate pricing competition. It is important to the integrity of the transaction that safeguard services like appraisal, title, legal, home inspection and other services are not affiliated with your brokerage firm or your agent.
6. Some listing contracts allow the broker to place a lien on your property in order to secure their compensation. This can interfere with your closing and give the broker an unfair negotiating position.
7. Brokers routinely pay secret referral fees to other brokers who send them buyers or sellers. These fees are rarely agreed to by consumers and affect your ability to negotiate a fee reduction.
8. Many brokers “advise” their clients to sign an Arbitration or Mediation Agreements that often severely impacts clients’ rights. Just like the rest of these clauses, seek competent legal advice from attorneys only.
We hope to add to this list soon as this list is by no means complete. Stay tuned!