• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Accessibility Statement

Follow Us on FacebookFollow Us on TwitterFollow Us on InstagramFollow Us on YouTubeRSS Feed

Kimberly Howell Properties

San Antonio Real Estate

office@kimberlyhowell.com
(210) 493-6888
  • Blog
  • About Us
  • Agents
  • Buyers
    • Neighborhoods
    • Relocation Information
  • Sellers
  • Listings
    • Available Rentals
    • Homes for Sale
    • McNair Custom Homes
    • Open Houses
  • Contact
  • Rental SearchHomes for Rent
  • REALTORS®Find an Agent
  • McNair Custom HomesNew Construction
  • Property SearchHomes for Sale
You are here: Home / Buying a Home / Buyer Representation Agreement: A Closer Look at Contracts

Buyer Representation Agreement: A Closer Look at Contracts

September 28, 2012 by khproperties 13 Comments

Buyer Representation Agreement

The Buyer Representation Agreement

The Residential Buyer/Tenant Representation Agreement (TAR Form 1501) is used by real estate agents in Texas to form a contractual agent-client relationship. Sounds like a mouthful, huh? In the simplest of terms, this contract binds the buyer and agent together and provides an outline of legal duties for the parties. It prevents a lot of headaches and one should be obtained by your agent when you begin working with them. While they may seem a bit scary at first, they’re actually quite easy to understand and very useful. Let’s take a look shall we?

1. PARTIES This is the easy part – it defines the parties (agent and buyer) and gives basic contact info for both.

2. APPOINTMENT This sentence sets it all up: “Client grants Broker the exclusive right to act as Client’s real estate agent for the purpose of acquiring property in the market area.” In Texas, all buying and selling takes place at the broker-level, which means that you are actually signing a contract with the broker of the company your agent works for. The agent is acting as their representative.

3. DEFINITIONS This paragraph lays out the definitions of the following words used throughout the buyer representation agreement: acquire, closing, market area, and property.

4. TERM Definition of the time frame for which the representation agreement with be in effect. The term must have a start and end date.

5. BROKER’S OBLIGATIONS Defines the three basic broker obligations to the client: to assist their client in acquiring property, assist the client in negotiating the contract to purchase a property, and to comply with other parts of the representation agreement.

6. CLIENT’S OBLIGATIONS Similarly, this paragraph defines the basic obligation of the client: to work exclusively with the broker in acquiring and negotiating the purchase property, inform other brokers, agents, sellers, and landlords that they are represented by the broker and refer them to the broker, and of course, to comply with others parts of the buyer representation agreement. * One of the most often broken obligations of the agreement is that of the client working exclusively with the broker.

7. REPRESENTATIONS This section consists of several statements that both parties (agent and buyer) are in agreement one. A. That each party has the legal capacity and authority to enter into this agreement. B. That the client is not a party to another buyer representation agreement with another broker. C. Client represents that information given to broker is true and correct. D. Defines any employer or relocation company that will provide benefits to the client.

8. INTERMEDIARY Determines (via checkboxes) whether client wish to see broker’s listings. If client wants to see the broker’s listings the agreement then goes into the details of intermediary, which deserves it’s own post.

9. COMPETING CLIENTS Explains that the broker may represent other clients seeking to obtain the same properties as the client.

10. CONFIDENTIAL INFORMATION Probably one of the most important paragraphs in the buyer representation agreement, this section provides for confidentiality of the client’s information. In Texas, without a signed representation agreement, the agent technically represents the agent. Buyer’s agency is a relatively recent development in the real estate world and without it, we all worked for the sellers…often to the buyer’s detriment. This has changed and this confidentiality and agent-client relationship are the most important items set forth by signing a representation agreement. Why wouldn’t you want someone looking out for your best interests? Would you want to work with an agent (in a non-agent-client manner) where the agent was not held to the standard of confidentiality and would therefore be obligated to pass info onto the seller? No way!

11. BROKER’S FEES This section outlines the various aspects of your agent’s commission from working for you to purchase or rent a home. It covers the actual commission, the source of the commission, how it is earned and when it is payable, additional compensation, how agents are paid if you purchase one of the broker’s listings (intermediary again), the protection period, and authorization to open escrow. As money is involved, this section is quite lengthy and verbose, since money disputes are the most common litigation item between buyers and agents.

12. MEDIATION This paragraph sets forth the requirement that in the event of a dispute, the broker and client will choose to submit to mediation before they move to arbitration or litigation. This helps prevent both parties from being sue-happy and requires them to try and work it out before it gets to that point.

13. DEFAULT No one likes to break a contract, but it does happen. This paragraph explains who is at fault and what remedy they may seek.

14. ATTORNEY’S FEES When explaining the buyer representation agreement to clients in a DUI law firm, I often jokingly call this the “loser’s clause” – it basically states that if one party does default and the dispute heads to litigation, the party that loses the case can be liable for court costs and lawyer’s fees of the other party.

15. LIMITATION OF LIABILITY Keeps the broker safe from personal injury and property damage lawsuits brought on my the client. This is a barrier to get compensation for a construction injury. If you break your leg while viewing properties with us, you can’t sue us.

16. ADDENDA A checklist of additional addenda that may be attached and considered part of the agreement. “Information About Brokerage Services” is automatically checked off, as it is required by Texas law.

17. SPECIAL PROVISIONS This blank space allows for factual statements and business details to be added to the agreement. This space should be blank 99.99% of the time. Agents must be careful inserting language in this section to avoid the unlicensed practice of law.

18. ADDITIONAL NOTICES These items are printed on the agreement in bold for a reason…they’re important! A. Commissions (fees) are negotiable and are not set by brokers or the National Association of REALTORS®. B. Broker’s services are provided without regard to race, color, religion, national origin, sex, disability, or familial status. (This is the basis for national Fair Housings laws, but the REALOR® Code of Ethics also applies sexual orientation to this list.) C. Suggests that clients should contact qualified professionals for areas of expertise outside of real estate (ie, inspectors, surveyors, engineers, environmental assesors, and compliance inspectors). D. Recommends that client should have an abstract of title and a title policy issued on the property – this is important as it protects the client from claims to rightful ownership of and/or claims against the property should they arise. E. References residential service contracts (commonly known as home warranties). These are an optional purchase and buyer should review the different service contracts for scope of coverage, exclusions, and limitations. F. Broker can not give legal advice as they are not attorneys. This agreement is a legally binding contract and because of this, if the client has any legal questions, they should consult with an attorney before signing.

That’s the whole buyer representation agreement in a nutshell. While it can seem a bit daunting when you’re first meeting an agent, it is important to consider this agreement as it provides both you and the broker with protections that can help make your home shopping experience better and much smoother. If you have any questions, you can always contact us and we’d be happy to help explain something you don’t understand in further detail.

As with any conversation about legal items and contracts, we must advise you that Kimberly Howell Properties is not a legal firm and can not give legal advice. We would be happy to supply you with a list of real estate attorneys in San Antonio if you seek legal advice. We have done are best to summarize the Residential Buyer/Tenant Representation Agreement here, but this in no way should be considered a full explanation of all the details contained within.

Related Posts

  • Can I Terminate the Contract? What Happens if I Do?Can I Terminate the Contract? What Happens if I Do?
  • Third Party Financing AddendumThird Party Financing Addendum
  • Non-Realty Items AddendumNon-Realty Items Addendum
  • Real Estate Negotiation – What’s Reasonable and What’s Not?Real Estate Negotiation – What’s Reasonable and What’s Not?
  • Does It Convey? – MLS vs. the ContractDoes It Convey? – MLS vs. the Contract

Filed Under: Buying a Home Tagged With: buyer representation, contracts

Quick Search

Reader Interactions

Comments

  1. Benjamin says

    May 10, 2016 at 8:54 AM

    Hello,
    My wife & I signed a buyer’s agreement, but are not completely satisfied, & are seeking to terminate the agreement. I noticed as i was looking upon the agreement, that section of “Term” on the agreement was left blank. You specified that this section MUST have a start & end date. Will this allow me to terminate freely the agreement? I also noticed that the broker who is also agent, typed my nickname instead of my full first name & typed my last name incorrectly in all areas where my name was noted. I signed my name in the client signature’s area, but the client printed name was incorrect, as noted she typed my nickname & incorrectly spelled my last name. Can this be eligible for termination of agreement?
    Thank you for your important information.

    Reply
    • Matt Stigliano says

      May 19, 2016 at 8:28 AM

      Sorry Benjamin – this comment got caught in the spam filters and we apologize for the delay in getting back to you. The terms of any contract can vary and because they are legally binding documents, this question would be best to take to a lawyer. We always advise clients to call their agent and the broker to see if you can work things out as often, there are solutions that are much better than involving a lawyer that will cost all parties money. Termination is a tricky topic in any contractual situation and you want to be sure you’re getting solid legal advice from someone who practices the law on a regular basis. Good luck with everything, we know it can be difficult when you feel you’re not getting what you wanted out of the relationship.

      Reply
  2. Mike Tonn says

    November 19, 2016 at 11:55 AM

    Is there a time period allowed on a residential buyer/tenant residential agreement that you can opt out of the agreement. This was signed while we were looking at a house. The broker assured us that we would receive a copy by the next day. Some contracts allow three to seven days to withdraw the contract

    Reply
    • Matt Stigliano says

      November 19, 2016 at 12:14 PM

      Mike – there is no specific language in the TAR Residential Buyer/Tenant Representation Agreement allowing a party to withdraw from the agreement and Paragraph 4 sets the term for the agreement. However, some brokers include additional language or use their own agreements, so the conditions of what you have signed may be different from the form as written. Consult with your agent and the broker to get copies of the agreement and speak with them about what obligations you may have. If you have deeper questions, you may want to consult with an attorney to review the agreement and help with a road map of your obligations and duties as well as those of the broker.

      Thanks for stopping by and adding your question to the conversation!

      Reply
  3. Ken Phelps says

    February 1, 2017 at 1:19 PM

    The intent of this document appears to offer substantial broker protection to the detriment of the client. Specifically Section 11. Per Section 11.B, if, for whatever reason, the commissions due the broker are not paid, it becomes the responsibility of the buyer…..even if the buyer has acted in good faith and paid all monies due at time of closing. This in essence mean that the buyer could pay the broker’s commission twice; once at closing and then again on demand from the broker if the seller has failed to pay the broker’s commission.

    Why would anyone wan to sign a document that does not seem to benefit them yet makes them liable for something they have no control over?

    Reply
    • Matt Stigliano says

      March 11, 2017 at 6:45 AM

      Ken – the intent of the document is to provide protections to both the buyer and the broker. The section on commissions that you mention, does not have a provision that allows a broker to collect a commission twice. The commission is always sought from the selling side first and is the way most commissions are paid. The listing agent charges the seller a negotiated commission, then offers compensation through the MLS to other brokers for bringing the buyer. It is this commission that typically is paid out to the buyer’s broker. The reason that paragraph exists is that sometimes there is no commission offered – best example of this is with a for sale by owner. Many for sale by owners do not offer commission (and don’t fall under MLS rules which require that offer of compensation)…so the agreement has a provision that allows the agent to seek payment of such commission from the buyer, since the seller or their (lack of an) agent will not be paying it.

      The single biggest benefit to a buyer for using a buyer representation agreement is that it creates that buyer-agent connection that allows for advice, opinions, and confidentiality. The way brokerage is designed in Texas (from the days before buyer representation existed), we all work for the seller unless buyer representation exists. While an agent must treat all parties honestly and fairly, it is not until the buyer becomes a client of the brokerage through buyer representation that they can be afforded those full benefits. It goes back to the old “don’t tell your agent anything you wouldn’t want a seller to know” way of thinking, which sadly was the way it was done until buyer representation became common place.

      I should also mention the most common internet fallacy about buyer representation – the one that works along the lines of “well if I don’t have an agent as a buyer, the seller won’t have to pay a buyer’s agent’s commission, so therefore I can get the house for cheaper.” This always sounds like it makes sense, but the truth of the matter is that the commission is determined at the time of listing the property and is between the seller and their agent. That commission is paid regardless of whether there is a buyer’s agent, so unless the seller is able to renegotiate that commission with their agent, the same amount gets paid to the listing brokerage, in effect paying the listing agent more than they would have received if there had been a buyer’s agent involved.

      Reply
  4. Peter Harrington says

    June 8, 2017 at 8:05 PM

    I am concerned about the clause that says the buyer is liable for the commission to his/her realtor if for any reason the seller’s broker fails to pay. WHy am I on the hook for a failure of the sellers broker?

    Reply
    • Matt Stigliano says

      September 9, 2017 at 11:18 AM

      That section is designed so that buyers don’t use their agent to find them the home and do all the work and then turn around and make an offer direct to the seller/listing agent. It also covers situations where there is no offer of compensation (For Sale By Owner is the best example) – the MLS is a direct offer of compensation between brokers, but if a property is not in the MLS, it is not bound by those rules. In a broker to broker transaction, the MLS is what creates the offer of compensation between the two. If the listing broker failed to pay, the buyer’s broker would have recourse (what we call procuring cause) to collect from the listing broker.

      Reply
  5. Michael Dawson says

    October 11, 2017 at 2:13 PM

    My wife signed a buyers agreement without fully understanding the terms of the contract. The contract lists both my wife and myself but I do not agree with the length of the contract or sec. 11g protection period. I have not signed the contract and have clearly stated to the agent I will not sign. Is the contract valid since as a listed party I have not signed. Thxs

    Reply
  6. Nickk says

    December 30, 2020 at 3:38 AM

    Hello and Happy Holidays,

    My girlfriend unintentionally found a home outside the market area as established and agreed in TAR definitions “market area”. Does she have the obligation to amend the agreement to include this potential area with her current realtor or is she free to use any broker outside the market area defined in her agreement if she decides to pursue this potential home?

    Thank you, Happy New Year!

    Reply
    • Matt Stigliano says

      January 4, 2021 at 11:23 AM

      This is a question you would want to pose to the agent and their broker.

      Reply
  7. Monica Ramsower says

    June 28, 2021 at 1:06 PM

    I signed a buyers agreement with an agent when looking for an investment property. I randomly have decided to sell one of my investments to the renter that is living there. Would that sale be tied to my agent?

    Reply
    • Matt Stigliano says

      July 11, 2021 at 2:26 PM

      As usual, there are a lot of factors to a question like this. Buyer/listing agreements are separate in the state of Texas, so a buyer representation agreement doesn’t also sign you up for selling side (however, there could be language in your particular agreement that does that – always best to ask your agent, broker, or a lawyer). However, since you mention a renter, if you have a property management agreement, that may include agreements for what happens in the event of a sale. Again, always best to refer back to your agreements and when in doubt ask your agent, broker, or lawyer.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Primary Sidebar

Recessions

What Past Recessions Tell Us About the Housing Market

It doesn’t matter if you’re someone who closely follows the economy or not, chances are you’ve heard whispers of an upcoming recession. Economic conditions are determined by a broad range of factors, so rather … [Read More...] about What Past Recessions Tell Us About the Housing Market

McNair Custom Homes Video

Recently, we had the pleasure of working with McNair Custom Homes and The IMG Studio to put together a video about McNair Custom Homes and their building philosophy. We love the way it turned out. We hope you … [Read More...] about McNair Custom Homes Video

Confused About The Housing Market?

Confused About The Housing Market? Lean On Your Realtor

If you’re thinking about buying or selling a home, you probably want to know what’s really happening with home prices, mortgage rates, housing supply, and more. That’s not an easy task considering how … [Read More...] about Confused About The Housing Market? Lean On Your Realtor

Homeownership Is An Investment In Your Future

Homeownership: An Investment In Your Future

There are many people thinking about buying a home, but with everything affecting the economy, some are wondering if it’s a smart decision to buy now or if it makes more sense to wait it out. As Bob Broeksmit, … [Read More...] about Homeownership: An Investment In Your Future

Ready for Homeownership?

What You Need To Know If You’re Ready For Homeownership

If you’re a young adult, you may be thinking about your goals and priorities for the months and years ahead. And if homeownership ranks high on your goal sheet, you’re in good company. Many of your peers are … [Read More...] about What You Need To Know If You’re Ready For Homeownership

Search Our Site

Real Estate Topics

  • Buying a Home
  • Homeowner Tips
  • KHP News
  • Local Events
  • Local Laws
  • Miscellaneous
  • Mortgages and Financing
  • Open Houses
  • Real Estate
  • Real Estate Market
  • Renters and Landlords
  • San Antonio Places
  • Sell Your Home
  • Technology
Our real estate agents can help you with properties anywhere in Texas. If you need assistance finding agents in other parts of the country, please contact us.

Search Homes

Explore Cities

  • Alamo Heights 35 Listings
  • Bandera 384 Listings
  • Blanco 192 Listings
  • Boerne 695 Listings
  • Bulverde 407 Listings
  • Canyon Lake 471 Listings
  • Castle Hills 21 Listings
  • Castroville 93 Listings
  • Cibolo 366 Listings
  • Comfort 57 Listings
  • Converse 670 Listings
  • Fair Oaks Ranch 51 Listings
  • Floresville 237 Listings
  • Garden Ridge 10 Listings
  • Helotes 144 Listings
  • Hill Country Village 3 Listings
  • La Vernia 170 Listings
  • Lakehills 140 Listings
  • Leon Valley 20 Listings
  • Live Oak 84 Listings
  • Mico 119 Listings
  • New Braunfels 1548 Listings
  • Olmos Park 9 Listings
  • San Antonio 10699 Listings
  • Schertz 295 Listings
  • Seguin 635 Listings
  • Selma 73 Listings
  • Shavano Park 14 Listings
  • Spring Branch 425 Listings
  • Terrell Hills 16 Listings
  • Universal City 96 Listings
  • Windcrest 30 Listings
  • Hollywood Pk 2 Listings

Stay up to date with the latest from Kimberly Howell Properties.

San Antonio real estate and property information provided by Kimberly Howell Properties. Kimberly Howell Properties does not assume any liability or responsibility for the operation or content of any of the linked resources, nor for any of the interpretations, comments, graphics, or opinions contained therein. All information deemed reliable, but not guaranteed.

KJH Properties, Inc. is a licensed real estate brokerage in the State of Texas, Equal Opportunity Employer, and supporter of the Fair Housing Act.

TREC Information About Brokerage Services | TREC Consumer Protection Notice | Privacy Policy

All content © 2009-2023 Kimberly Howell Properties, unless otherwise noted.