08/19/2024
🏡 Important Update for New Jersey Homebuyers: New Exclusive Buyer Agency Rules Are Here! 🏡
As of August 17th, 2024, the National Association of Realtors (NAR) requires all buyer agents to have a signed Exclusive Buyer Agency Agreement before showing any properties. 📝 This change is designed to make sure both you and your agent are fully clear on expectations and responsibilities before any home tours begin. Here’s a simple breakdown (not legal advice – always consult with your agent or legal counsel for specific guidance!):
Exclusive Buyer Agency Agreement (NJ) Explained:
1️⃣ Parties to the Agreement:
This section is straightforward – it lists you (the buyer), the broker, and the agent you’ll be working with.
2️⃣ Agency:
This part identifies the buyer and the areas where the agreement applies. If no specific area is mentioned, the agreement covers the entire state of New Jersey. However, you can narrow it down if you have multiple agents in different regions. For example, you might work with different agents in North, Central, and South Jersey.
3️⃣ Buyer Representation:
In this section, you disclose if you have any other agreements with different brokers in the specified areas. This helps avoid conflicts, especially if any protection periods apply from past agreements with other agents.
4️⃣ Agency Disclosure:
This explains whether your agent will exclusively represent you as a buyer’s agent or if they can also act in a dual or designated agency capacity. Dual/designated agency comes into play when the listing agent is also representing you as a buyer. Most agents will check this box to keep that option open, but it’s important for you to understand how it could affect negotiations.
5️⃣ Term & Protection Clause ( Important!!!)
The term includes a start date and an end date. The end date could be tied to when you purchase a property or a specific date in the future. If your offer is accepted but closing happens after the agreement’s term, an updated contract is typically required. This section also has a protection clause: even after the agreement ends, if you buy a property that your agent showed you within a specified number of days (usually 30-90 days), your agent is still entitled to a commission.
6️⃣ Commission to Broker:
This part is often the trickiest for buyers, so here’s a breakdown:
5(a)(1) Retainer Fee:
Most agents won’t charge a retainer, but some might – especially top agents. This fee is usually paid upfront.
5(a)(2) Commission If the Seller Doesn’t Pay:
In most cases, the seller pays the buyer’s agent a commission, typically 2-3%. But if the seller doesn’t pay, the buyer might be responsible. Your agreement should clearly state what you’ve agreed to pay if the seller doesn’t cover the fee.
5(a)(3)(i) When the Commission Is Due:
Even though commission is typically paid at closing, the agent earns it once your offer is accepted and the property goes under contract.
5(a)(3)(ii) Protection Period:
If you switch agents but later buy a property that your original agent showed you within the protection period, they may still be entitled to the commission.
5(a)(3)(iii) & 5(a)(4) Buyer Default:
These sections cover what happens if you back out of a deal. Depending on the situation, the agent may still be owed their commission. Discuss with your agent or attorney if any confusion.
5(a)(5) Commission Total on the Purchase Price:
This section covers different scenarios like seller concessions. It’s important to discuss these details with your agent.
7️⃣ Commission from the Seller (Section 5b):
This part addresses properties where the seller is offering a commission. Key questions to clarify:
If the seller offers more commission than agreed, does the extra go to your agent, or is it credited back to you?
If the seller offers less, will your agent still show you those properties, or only properties that meet the agreed commission rate?
Sections 6-16 cover disclosures and other informational items – take time to read through them so you’re familiar.
Optional: Section 17 (Additional Terms):
Here’s where you clarify how excess commission is handled or if properties offering less than the agreed commission will still be shown.
Before signing, always review the agreement, ask questions, and make sure you fully understand it. 🚨
Disclaimer: This is a layman’s explanation, not legal advice. Always consult with your real estate agent or legal counsel for detailed guidance.
Good luck and happy house hunting! 🏠🔑
