You just hung up the phone with your brother’s boss’s second cousin’s roommate, who was told you are the best REALTOR® for helping them buy a home. You have discussed mortgage pre-qualification and the type of property they are looking for, and as a professional, you have set a face-to-face meeting with them for a buyer’s consultation where you will review the documents with them. Great job!... but what documents? The Consumer relationships guide is necessary but what kind of written service agreement should you use? Let’s talk about the two different options.
Exclusive Buyers Representation Agreement (EBRA)
This form is certainly the most common form of written service agreement used by professional REALTORS® in Alberta, and for good reason. The EBRA is used to identify the rights and responsibilities a professional REALTOR® has in the relationship, as well as the service they will offer. It also clearly states the rights and responsibilities of the buyer, including what they agree to pay the brokerage for the use of their services in successfully finding a home for them.
As is common in Alberta, the seller’s brokerage often offers a fee to the buyer’s brokerage through the MLS® system, and the EBRA gives the authority from the buyer to have their fee paid by the seller through the transaction. Even better, the professional REALTOR® will make best efforts to find all properties that match the buyer’s criteria even if they are not listed on the MLS® system, and the EBRA allows the buyer's brokerage to get their fee from the seller directly in such situations.
Non-exclusive Buyers Representation Agreement (NEBRA)
This form is not as common in practice because although it still clearly lays out the rights and responsibilities of the buyer’s brokerage and the buyers themselves, it does not commit the buyer to the brokerage. This means the buyer could sign a NEBRA with multiple different agents and none of them are securing a fee for the services provided by the REALTOR®.
Because the NEBRA does not define a fee for service to be paid by a buyer, when a buyer finds a home they want to write an offer on, the REALTOR® would require the buyer to sign a fee disclosure, disclosing the fee they will be paid by the seller or the seller’s brokerage advertised through the MLS® system. However, the REALTOR® will not be able to negotiate a fee other than what they are offered through the MLS® system, or in the case of an unrepresented seller the amount defined by the agreement with the seller directly.
Choosing the option for the situation
The choice between using an EBRA and a NEBRA is a choice based on the core nature of the expectations between the buyer and the brokerage/REALTOR®. Both parties must be in agreement before signing, but If the buyer feels comfortable that the REALTOR® will be working exclusively for them, and wants to ensure adequate compensation for them then the EBRA is the right document. Whether the buyer and REALTOR® just met, or the relationship is tentative, then perhaps a NEBRA is the right choice for the buyer's comfort as trust is established.
Regardless of the option chosen the written agreement should always be clearly explained and completed before visiting homes or writing offers, so both parties understand the expectations each other have.