The New Buyer Agency Contract Law in New Jersey

Buyer Agency Contract

Starting in August 2024, a new law in New Jersey will require buyers to sign a Buyer Agency Contract before a real estate agent can show them properties. This contract ensures the agent is working exclusively for the buyer and also outlines how the buyer’s agent will be compensated.

What is a Buyer Agency Contract?

A Buyer Agency Contract is a legal agreement between the buyer and their real estate agent. It guarantees the buyer will work exclusively with that agent in their search for and purchase of a property. In other words, the agent agrees to represent the buyer throughout the entire process.

How is the Buyer’s Agent Paid?

1. Seller Pays the Buyer’s Agent Commission: In most cases, the seller pays the buyer’s agent’s commission. This commission is typically a percentage of the sale price (usually between 2% and 3%) and is included in the property’s price.
2. If the Seller Doesn’t Offer a Commission: If the seller does not offer compensation to the buyer’s agent, the buyer will need to cover the commission. However, there are often ways to handle this, which we’ll discuss below.

Options for Buyers if the Seller Doesn’t Offer a Commission

If you find yourself in a situation where the seller isn’t covering the agent’s commission, don’t worry. There are options:

1. Add the Commission to Your Mortgage: In many cases, you can include the agent’s commission in your mortgage loan. This allows you to finance the cost over time, easing the initial financial burden. Be sure to check with your lender to confirm this option is available.
2. Negotiate with the Seller to Cover the Commission: You might be able to negotiate with the seller to either cover the commission or adjust the property price to account for it.
3. Adjust the Property Price: Depending on the market and the property, you could also negotiate a price adjustment to cover the agent’s commission. This way, the buyer wouldn’t have to pay the commission directly, but the overall cost of the property would increase.

Why is Signing the Buyer Agency Contract Important?

The new law ensures that both the buyer and the agent are clear on their expectations and responsibilities. By signing this contract, you’re guaranteed exclusive representation, meaning your agent is fully committed to finding the right property for you and guiding you through the purchase. The agent’s compensation is settled at the end of the transaction, either by the seller or the buyer, depending on the situation.

Key Takeaways

• If the seller pays the commission (which is the most common scenario), you won’t have to pay anything to the agent.
• If the seller doesn’t pay the commission, the buyer will be responsible for it, but there are ways to include the cost in your mortgage loan.

There are no upfront costs for signing the Buyer Agency Contract. You’re simply entering into an exclusive relationship with your agent, giving you peace of mind knowing they are working in your best interest.

Next Step
Once we sign the Buyer Agency Contract, we can begin viewing properties and move forward with the buying process. I’ll send you the agreement to review at your convenience, and if you have any questions, I’ll be happy to explain everything. I’m here to help every step of the way. Let’s make this process smooth and stress-free!

Have questions or want more details about the process?
Feel free to reach out to learn more about signing the Buyer Agency Contract and how we can handle compensation if the seller doesn’t cover the commission.