New Law for Home Buyers in New Jersey Starting August 1, 2024
Starting August 1, 2024, a significant change will come into effect for home buyers in New Jersey. Governor Phil Murphy signed into law S3192/A4454 in July, which mandates that all home buyers must SIGN A CONTRACT (EXCLUSIVE BUYER REPRESENTATION AGREEMENT) mirroring the process sellers have followed for years. This move aims to provide buyers with clearer guidance and protection throughout the home-buying process.
Understanding the Exclusive Buyer Representation Agreement
The key part of this new requirement is the Exclusive Buyer Representation Agreement, a contract that formalizes the relationship between a buyer and their chosen real estate agent. Here’s a breakdown of the agreement in straightforward terms to help new buyers understand their commitments and rights:
1. Appointment of an Exclusive Agent
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Who: The agreement is between you (the buyer) and a Real Estate Brokerage (for example Compass New Jersey, LLC dba Compass)
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What: You are appointing Compass as your exclusive agent to help you find and buy property in specific areas.
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Why: This ensures that all property negotiations are handled fairly with all parties
2. No Conflicting Agreements
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You, as a buyer, confirm that you are not currently bound by another buyer representation agreement with a different real estate agent or broker.
3. Declaring the Business Relationship
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By law, real estate agents must declare their business relationship with you. Your agent will indicate if they are acting solely as your agent or if they might also represent the seller (dual agent).
4. Term of the Agreement
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Start and End Dates: The agreement specifies when it begins and ends. If you enter a sale agreement before this ends, the term extends until the property sale is completed or the sale agreement is terminated.
5. Buyer’s Responsibilities
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Review Properties: You agree to consider properties through your agent
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Submit Offers: All purchase offers must go through your agent
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Provide Information: You need to give accurate personal information to your agent and review all documents they provide.
6. Brokerage and Agent Responsibilities
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Locate Properties: Your agent will work to find properties that meet your needs.
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Negotiate Terms: They will negotiate purchase terms on your behalf.
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Support: Your agent will assist you throughout the buying process and represent your best interests.
7. Compensation
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Commission: You agree to pay the Brokerage a commission (a percentage of the property’s purchase price or a specified amount. Most sellers will continue to offer incentives to buyer brokers for the sale of property in which case you as the buyer will only be responsible for the difference which you may also negotiate or include it in your purchase price and request that the seller disburse compensation to the Brokerage)
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Protection Period: If you buy a property introduced by your agent within a certain period after the agreement ends, you still owe them the commission.
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Dual Agency and Seller’s Offer: If Compass also represents the seller, they must disclose this and get written consent from both parties.
8. Dual Agency
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If the Brokerage represents both you and the seller, they become a dual agent and cannot fully prioritize one party’s interests over the other. This requires your informed consent.
9. Consumer Information Statement
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You acknowledge receiving a statement explaining the types of real estate relationships in New Jersey.
10. Legal Compliance
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Both you and the Brokerage agree to follow all applicable fair housing and anti-discrimination laws.
Conclusion
With this new law, New Jersey aims to ensure that home buyers are well-informed and protected throughout their real estate transactions. Understanding the Exclusive Buyer Representation Agreement is crucial for all prospective home buyers to ensure a smooth and transparent buying experience. It is in the Buyers best interest to interview agents (similar to how Sellers interview agents) to ensure you are being represented with the individual you believe is the right fit for your real estate goals. We are always available to answer your questions 551.206.9264
