A Buyer’s Representation Agreement (BRA) is a formal contract between a homebuyer and a real estate brokerage that outlines the services the agent will provide and the obligations of both parties throughout the home-buying process. Signing a BRA offers several advantages and protections, ensuring a clear understanding of the relationship and expectations.
Why You Should Sign a BRA
1. Formalizing the Relationship
When you sign a BRA, you become a client of the brokerage, formalizing the relationship and guaranteeing that the agent will act in your best interests. This includes searching for properties, scheduling viewings, providing market analyses, and negotiating on your behalf.
2. Comprehensive Services
The BRA details the scope of services you will receive, tailored to your specific needs. These services can range from preparing offers on properties to viewing homes and providing market insights. The agreement ensures you receive dedicated and focused assistance in your property search.
3. Clear Compensation Terms
The agreement specifies how the agent will be compensated, typically through the listing brokerage, from the sale proceeds. However, it also clarifies any situations where you might be responsible for paying the commission, such as purchasing a property not listed on the MLS. Understanding these terms upfront can prevent misunderstandings.
4. Types of Representation
Ontario has two types of representation agreements: Brokerage Representation Agreements and Designated Representation Agreements. The brokerage and all its agents represent you in the former, but one agent is your primary contact. In the latter, one or more agents are designated to represent you, while the rest of the brokerage’s agents must treat you impartially. Designated representation, introduced on December 1, 2023, reduces the likelihood of multiple representations, where the same brokerage represents both the buyer and seller in a transaction.
5. Specific Terms and Conditions
The BRA should outline the duties owed to you, your rights and responsibilities, the specific terms of the agreement, and how long it will last. It also includes details on how the agreement can be terminated and any associated penalties or costs.
6. Scope of Engagement
The agreement may specify a particular property, geographic area, or property type for buyers. This clarity helps avoid disputes about commission payments if you buy a property within the defined scope.
7. Termination Provisions
The agreement should clearly state all circumstances under which it can be terminated. This includes scenarios involving multiple representations or changes to your designated representative. Understanding these provisions helps ensure you are aware of any penalties or costs.
8. Expiry Date and Holdover Clause
The agreement’s expiry date must be prominently displayed on the first page. Be mindful of the holdover clause, which may obligate you to pay the brokerage fees even after the agreement expires if you complete a transaction within a specified period.
The Key Considerations Before Signing
Review the Agreement
Protect yourself by thoroughly reviewing the BRA in detail. Ensure you understand all terms, including services provided, compensation, scope, and termination provisions.
Ask Questions
Discuss any concerns or questions with your potential agent to ensure clarify and mutual agreement. Ensure that any specific services you need to expect are included in the agreement.
Understand Your Rights
Know your rights and responsibilities under the agreement, and ensure you are comfortable with the terms, including the holdover clause and how it impacts you after the agreement expires.
A Buyer’s Representation Agreement (BRA) formalizes the relationship between a homebuyer and a real estate brokerage, outlining the services provided and the obligations of both parties. Signing a BRA ensures that the agent acts in your best interests, clarifies compensation, and fosters a dedicated working relationship. Thoroughly reviewing and understanding the terms of the BRA before signing is essential to ensure a positive and productive home-buying experience in Toronto!
Did you find this useful?
