This is the fifth episode in our new video series depicting the seismic shift in the representation of buyers in 2025, and is an excerpt from the firsttuesday Buyer Representation Bonus Training™.
The Bonus Training dramatizes:
- the origin of the “same-percentage, same-split” industry custom being unwound by recent legislation;
- the contents of the newly-mandated buyer representation agreement, also called a BRA;
- critical rules surrounding retainer periods, and how buyer representation is extended or modified; and
- your practical use of the buyer representation forms as depicted through various sample transactions and scenarios.
The Buyer Representation Bonus Training™ is available to current and future firsttuesday students without charge.
Why this episode matters: Grab the buttered popcorn and pull up a chair – below, we bring buyer representation to life.
Buyer representation – dramatized
Consider a buyer who is an individual seeking to purchase real estate. The buyer wants to work with a broker whose agent will advise and assist them to achieve their objectives in a property acquisition.
The buyer interviews an agent and determines the agent is best suited to help them acquire the property they seek.
The agent explains their next step is to enter into a buyer representation agreement authorizing the agent to represent the buyer exclusively. [See RPI Form 103.1]
The agent benefits from the representation agreement since it assures them collection of a fee when the individual acquires the type of property they want. The buyer benefits from the agreement, since the broker and the agent are identified as the buyer’s fiduciaries and the services they can expect the agent to diligently provide are clarified.
The agent explains the provisions in the individual’s buyer representation agreement, also known as a BRA, include:
- a retainer period: the buyer and agent agree on the date the broker is retained and when the employment expires, limited to three months from the date of the agreement [See RPI Form 103.1 §1];
- broker obligations:
- the broker will use diligence in serving the buyer’s needs in exchange for a fee [See RPI Form 103.1 §2.1];
- the broker may represent buyers who seek comparable properties to the property sought during the retainer period, thus a conflict of interest exists to the extent the broker’s time is required to fulfill the fiduciary duty owed to other buyers they represent exclusively;
- general provisions such as:
- the buyer’s acknowledgement they received the Agency Law Disclosure [See RPI Form 305];
- the buyer’s authorization that the broker may divide fees with other brokers;
- a provision stating the prevailing party in any action in a dispute will be entitled to attorney fees and costs, unless they file an action without first offering to enter into mediation to resolve the dispute; and
- the agreement is governed by California law [See RPI Form 103.1 §3];
- brokerage fee: the buyer and broker agree on the situations triggering payment of a fee, either as a percentage of the purchase price, or a fixed fee. The broker earns a fee when:
- the buyer’s objective is achieved during the retainer period;
- the buyer acquires a property within one year after the representation expires when the broker introduced the buyer to the property during the representation period; or
- the buyer terminates the broker’s employment without legal justification during the retainer period. [See RPI Form 103.1 §4]
Critically, the buyer agrees the broker fee is to be paid by the seller from the funds accruing to the seller on the buyer’s price paid, as called for in the purchase agreement. Thus, when the transaction closes as expected, the buyer does not separately pay the buyer broker fee. [See RPI Form 103.1 §4.2(a)]
However, the buyer is to pay the fee in all other situations where the broker is entitled to a fee. [See RPI Form 103.1 §4.2(b)]
Further, the broker and buyer may agree to an hourly rate earned by the broker and paid by the buyer when the representation terminates without the broker otherwise earning a fee. [See RPI Form 103.1 §4.3]
The agent prepares the form by entering a general description, location and size for the property sought. When the client seeks to rent a property rather than purchase it, the agent enters the location, rental amount and term sought. [See RPI Form 103.1]
The broker and buyer agree to the representation agreement and sign it. Only when the buyer broker obtains a representation agreement, signed by their buyer, may the broker submit their buyer’s purchase offer and expect to receive a fee on the transaction – and avoid violating real estate contract law.
The buyer reviews property available for sale with their agent. They view open houses independently and together. Eventually, the buyer selects a property suitable for acquisition, which may or may not have been initially located by the agent.
With the buyer representation already entered into, the buyer submits a purchase agreement offer for the property – through their agent – to the seller by handing the offer to the seller agent.
However, in negotiations, the seller and seller agent stall and behave erratically. Ultimately, the deal falls through. Further, the period of representation has or is about to expire without the buyer purchasing a property.
What’s next for our buyer?
Renew or not to renew, that is the question
The buyer still wants to purchase a property and is happy with the service provided by their agent.
In other words, the buyer wants to continue to work with the broker and their agent to locate and acquire property.
The broker and the individual buyer then agree to and enter into a Renewal of Buyer Representation Agreement. [See RPI Form 103.1A]
The broker using the representation form enters:
- facts, including:
- the date the representation was entered into;
- the buyer’s name;
- the broker’s name; and
- the real estate services sought by the buyer [See RPI Form 103.1A §1];
- the date the new retainer period is to expire, not to exceed three months from the date of the renewal agreement [See RPI Form 103.1A §2.1]; and
- other modifications to the representation agreement.
The buyer and broker sign the renewal form. The agent and buyer continue to look for properties, and a suitable property is promptly located.
The agent prepares the buyer’s offer using a purchase agreement form with a fee provision calling for the seller to pay the buyer agent fee on closing. [See RPI Form 150 §8.1]
The seller accepts the buyer’s offer which binds the seller and buyer to the terms of the purchase agreement. The purchase agreement acceptance is evidence the broker earned a fee under the buyer representation agreement. Escrow is opened with instructions dictated to call for the buyer broker’s fee to be paid from funds accruing to the seller’s account on closing. [See RPI Form 103.1 §4.2(a) and 150 §8.1]
Escrow closes and, well, you have your typical Hollywood ending.
Editor’s note – This same scenario works similarly for an entity buyer seeking to acquire real estate with the advice and assistance of a buyer broker. However, with an entity client, the expiration of the representation period calls for an extension on modification of the representation agreement, not a renewal of the agreement.
Thus, the broker representing a buyer which is an entity, while mandated to obtain a representation agreement to evidence the employment, may negotiate any acceptable representation periods, both initially and on expiration. With an entity as the buyer, the broker is unaffected by the three-month limitation of the representation period for individual clients. The renewal may happen for whatever time period the broker and entity buyer agree to. [See RPI Form 103.2 and 103.2A]
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