Buyer Broker Agreements (BBAs) are contracts between a real estate agent and a potential buyer, establishing the terms of their relationship during the home-buying process. While these agreements can offer benefits such as dedicated representation and assistance in finding the right property, they also come with potential hidden costs and drawbacks that buyers should be aware of before signing.
Limited Flexibility: Signing a BBA typically restricts buyers to working exclusively with the agent or brokerage firm named in the agreement. This limits the buyer’s ability to work with multiple agents simultaneously to explore different options or compare services.
Financial Commitment: Some BBAs include clauses requiring buyers to pay a commission or fees to the agent or brokerage, even if they ultimately purchase a property without the agent’s assistance. This can be a significant financial burden, especially if the buyer finds a property through other means or decides not to purchase at all.
Potential Conflict of Interest: In some cases, BBAs may incentivize agents to prioritize their own interests over those of the buyer. For example, an agent may be motivated to push a particular property or negotiate a higher price to secure a larger commission, rather than focusing solely on finding the best deal for the buyer.
Pressure to Buy Quickly: Agents operating under BBAs may exert pressure on buyers to make a purchase decision quickly, as their compensation may depend on closing a sale within a certain timeframe. This can lead to rushed decisions and potentially overlook important considerations or flaws in a property.
Difficulty Terminating the Agreement: Once signed, BBAs can be challenging to terminate or amend, especially if the buyer wishes to switch agents or work with a different brokerage. Buyers may find themselves locked into a contract that no longer serves their needs or interests.
To avoid these hidden costs and potential drawbacks, buyers should carefully review and negotiate the terms of any BBA before signing. It’s essential to understand exactly what services are being provided, what fees are involved, and how the agreement can be terminated if necessary. Additionally, buyers should consider working with agents on a non-exclusive basis or exploring alternative options, such as hiring a real estate attorney for representation during the home-buying process. Ultimately, the goal should be to retain as much flexibility and control as possible while still benefiting from the expertise and support of a qualified real estate professional.