Understanding Buyer Representation Agreements in San Francisco

Why use a buyer representation agreement when purchasing a home in the city of San Francisco, anywhere in the bay area, or California?

Navigating the quick-to-change, highly-regulated, and complex real estate market is a challenge, and professional representation will give you an advantage when competing to find your property.

In addition to complying with recent practice changes and state laws, a buyer representation agreement ensures that your interests are protected and everyone understands their roles, responsibilities and limitations.

In this blog post, we’ll delve into what a Buyer Representation Agreement is, why it is beneficial, and how it works for buyers in the San Francisco real estate market.

What is a Buyer Representation Agreement?

A Buyer Representation Agreement is a contract between a buyer and a real estate brokerage. These agreements outlines the duties, responsibilities, and expectations of both parties throughout the home-buying process.

This agreement helps make sure that your real estate pro understands your expectations, has agreed to act in your best interests, and will provide you with the professional advice, support, insight, and negotiation skills to make your real estate goals a reality.

 

Buyer Representation Agreement forms used in California and San Francisco are written by a variety of parties.

The California Association of Realtors, often considered the “gold-standard” for California real estate forms, publishes both the Buyer Representation and Broker Compensation Agreement (BRBC) and the Property Showing and Representation Agreement (PSRA).

A variety of real estate brokerages have also published their own Buyer Representation forms. Third party form providers, such as PRDS, also have published forms for establishing buyer brokerage relationships.

Why You Need a Buyer Representation Agreement in San Francisco

To view MLS listed homes with an agent, it is required after August 17, 2024 for the NAR settlement and after January 1, 2025 by California state law.

In addition to compliance with rules and recent laws, there are many great reasons and benefits to signing a Buyer Representation Agreement in San Francisco.

San Francisco’s real estate market is notoriously competitive and fast-paced. Having a dedicated professional in your corner will make a significant difference. Here are just a few of the many benefits to signing an agreement with a local SF agent:

• Exclusive Commitment in Writing

  When you sign a Buyer Representation Agreement, your real estate agent commits to representing you. This means they prioritize your needs and search over other buyers who are not yet ready to move to this phase of the property search process.

• Expert Local Knowledge

  San Francisco’s neighborhoods each have unique property types, attributes, pricing, and market trends. An experienced agent, bound by a representation agreement, will be ready to share their valuable local knowledge to help you make informed decisions.

• Access to Off-Market Listings

  San Francisco’s competitive market often includes off-market or “pocket” listings not seen on general listing websites or in the SF MLS. Working with an agent after signing a buyer rep agreement will provide access to these exclusive opportunities.

• Strong Negotiation Skills

  With a Buyer Representation Agreement, you ensure that your agent is motivated to negotiate fiercely on your behalf, aiming to secure the best price and terms for your purchase.

• Professional Guidance and Support

  From the initial property conversation and search to getting keys (or fobs) and closing the deal, professional guidance ensures fewer misunderstandings or mistakes and a smoother process. Your agent is ready to assist with paperwork, inspections, connecting you with reliable service providers, designers or other professionals.

• Confidentiality and Fiduciary Responsibility

  Agreements provide a layer of security and trust, by explaining and clarifying how an agent will act in your best interests and keep your information confidential.

Key Components of a Buyer Representation Agreement

To fully understand the importance of the Buyer Representation Agreement, let’s break down its key components:

• Type of Buyer Representation

  There are two basic forms of representation: exclusive and non-exclusive. Agents and clients can agree to either. Depending on the type of representation agreed to, the cancellation and payment agreements, among other terms, may vary.

• Compensation Amount & Terms

  The agreement will detail who and how much the brokerage will be compensated. Historically, the seller has paid the commission, but compensation is negotiable and not set by law. The agreed amount can be a percentage, flat fee or other agreement (hours worked, etc).

• Term and Termination

  The agreement will specify the duration of the contract and the conditions under which it can be terminated, which may vary based on the type of representation agreed to. As of January 1, 2025 California law sets a 90 day maximum time period for buyer broker agreements, and they can be renewed as many times as mutually agreed.

• Scope of Services

  Outlines the services the agent will provide, such as property searches, access to off-mls properties, price analysis, negotiation, and transaction coordination, to name just a few.

• Duties and Responsibilities

  Details the duties of both the brokerage/agent and the buyer, ensuring mutual understanding and expectations.

Unique San Francisco Market Considerations

San Francisco’s housing market is like no other. The city is known for its diverse architecture, historic charm, and breathtaking views, but it also comes with high prices and limited inventory. Here are some San Francisco-specific market considerations:

• SF Neighborhood Knowledge

  From the tech-savvy South of Market (SoMa) to the quaint streets of Noe Valley, each SF neighborhood offers a unique vibe, style, and experience. Your Jackson Fuller agent is ready with detailed insights into SF neighborhoods, no matter your lifestyle and budget.

• SF Market Dynamics

  With decades of experience, we know that San Francisco’s market can be volatile. Understanding the latest trends and data is pivotal for making a competitive yet fair offer.

• SF Rules, Regulations and Requirements

  San Francisco real estate is a highly regulated industry, from rent control rules affecting property use to point of sale compliance ordinances for water, energy, and more. San Francisco has extensive planning requirements and building codes, especially pertaining to historic properties and areas. A Jackson Fuller agent is here to help you know what you don’t know you need to know so you can avoid future headaches.

• SF Offer Dates and Offer Strategy

  High demand often leads to offer dates and bidding wars. But not always. To help you win offers in competitive situations, your JF agent will craft a strategic offer that stands out and is guided by your best financial interests.

• California Financing & Insurance Challenges

  With high property values, securing financing can be complex. The California insurance market also offers challenges. An agent will guide you towards lenders and insurers experienced in the San Francisco market.

How to Choose the Right Agent for Your Buyer Representation Agreement

Choosing the right agent is crucial for a successful home-buying experience. Here are some tips to find the best match for your needs:

• Experience, Specialization, Designations

  Look for agents with experience in San Francisco or the area you are looking to purchase a home in. With around 90 neighborhoods, most agents do business in more than one. Specialization in buyer representation is a plus. We’ve been representing SF buyers and sellers since 2003 and are happy to chat more about our experience and expertise.

• What Past Clients Say

  Read reviews and ask for references. Past clients can provide insights into the agent’s reliability and professionalism. We hope you’ll take a moment and check out our reviews.

• Interview Us And At Least One Other Agent

  Don’t necessarily settle on the first agent you meet. Many buyers find it helpful to Interview multiple agents. Chatting with more than one person will allow you to get a sense of their personal style as well as to compare their knowledge, approach, and compatibility with your needs.

• Check Credentials

  Ensure the agent has a current license with no disciplinary actions. The CA Department of Real Estate maintains an online portal to make it easy for you do to that.

Steps to Signing a Buyer Representation Agreement

Once you’ve chosen your agent, the process of signing a Buyer Representation Agreement is straightforward:

• Review & Sign The Agreement

  Read and review the agreement’s terms. While electronic signature services may scroll the pages by quickly, you can always scroll up to start over, download a PDF to read separately before signing, or print out a copy if you prefer to review hard copy documents.

  Be sure you understand the services, compensation, term length, and any exclusivity clauses. If there are terms you’re not comfortable with, discuss them with your agent. A good agent will be able to explain why they ask for what they ask for, and may be open to negotiation based on your situation. Once you’re satisfied with the agreement, sign and date the document.

• Initial Consultation

  Now that you’ve got an agreement to work together in writing, it is time to meet with your agent to discuss your needs, preferences, and budget. This is a good time to ask additional questions about the process and set expectations you might have about working together.

Common Misconceptions About Buyer Representation Agreements

Despite their many benefits, there is also plenty of confusion about Buyer Representation Agreements. Here are a few things about them that aren’t true.

• They Aren’t Just for High-End Buyers

  These agreements are beneficial for all buyers, regardless of budget. Professional representation can save money and stress at any price point.

• You’re Not Locked In Forever

  Agreements have a set term and can often be terminated under specific conditions if you’re dissatisfied with the agent’s performance. In California, beginning in 2025 the maximum length of an agreement can be 90 days, and it can be extended as many times as mutually agreed.

• It Doesn’t Increase Your Costs

  Historically in American real estate the seller has paid all or a portion of the buyer’s agent compensation. An agreement will clarify who is responsible for payment under what circumstances, ensuring no surprises.

• They Are Optional

  While they used to be an option for buyers, they are now almost universally required. After August 17, 2024 local MLS rules require a buyer agent to have a signed buyer representation agreement prior to showing an MLS listed home. After January 1, 2025 California state law will also require a buyer agent offering their services to have a signed buyer rep. agreement.

Let’s Talk

Navigating the San Francisco real estate market can feel overwhelming and daunting, and a Buyer Representation Agreement simplifies and secures the process and is now a requirement if you do work with a buyer agent. By ensuring you have a dedicated professional in your corner, you’ll gain access to exclusive listings, expert local knowledge, and robust negotiation skills.

If you’re considering buying a home in San Francisco, we’d love to have a conversation about what you are looking for and see if signing a Buyer Representation Agreement with our team is a good fit. Your journey to finding the perfect home in this dynamic city will be smoother, more efficient, and ultimately more successful.