New Era of Homebuying: Understanding Indiana's Required Buyer Agency Contract

As a homebuyer in Indiana, the way you work with your real estate advisor has undergone a significant change. Effective July 1st 2024, Indiana now requires a written Buyer Agency Contract to be signed before an agent can perform certain agency services, such as drafting an offer and touring homes.  This shift emphasizes transparency in the real estate transaction and places the negotiation of compensation directly in the hands of the buyer instead of the seller, ensuring a clear, professional relationship from the outset.

Before You Start Working with an Agent

The new regulation establishes a formal relationship built on mutual understanding and clear expectations, a standard practice aligned with the professional competence of many Engel & Völkers offices even before this recent mandate.

• Sign a Touring Agreement and/or Buyer Agency Contract: For showings, the Touring Agreement allows a consumer-friendly option for a preliminary agreement without any upfront fees or contractual obligations until the buyer is ready to move forward formally.You must sign a Buyers Agency Contract with your real estate broker before they can provide any official agency services, including writing a Purchase Agreement.  

• Understand the BAC: The Buyers Agency Contract formalizes the professional relationship, clearly outlining the exclusive services the advisor will provide and, importantly, defining the terms of their compensation. For more detailed information, we recommend a Buyers Consultation with your selected agent and referring to the Indiana Association of Realtors guidelines.

• Discuss Compensation: You, the buyer, are now responsible for negotiating the agent's fee, and the Purchase Agrement now dictates if the buyer or seller pays the fee at closing. This compensation is typically structured as a percentage of the home's sale price, and it should be thoroughly discussed and agreed upon with your advisor before the contract is signed.

Navigating the Home Search and Compensation

The new framework encourages educated negotiation and transparency throughout the search process, helping you find a property that perfectly aligns with your lifestyle and financial goals.

• Negotiate Commission: It is essential that you negotiate the agent’s commission directly with them. While you are responsible for this fee, your agent can and will negotiate with the seller to have them contribute all or part to your compensation agreement at closing.

• Understand Who Pays: You are responsible by default for paying your agent's commission as outlined in your signed contract. However, as mentioned above, the payor is still neogotiable, and the seller retains the option to contribute to that payment if mutually agreed upon during the negotiation process.

• Know Your Options: Your trusted advisor must present offers on any home you are interested in. Be wary of any agent who limits your home choices only to properties where the seller is already offering a specific commission rate. You should have a frank discussion with your agent about potential scenarios where the seller may not cover the full commission you agreed to.

After the Closing

Even after you’ve successfully secured your new Indianapolis residence, the contract governs the final terms and relationship.

• Understand Termination: A Buyer Agency Agreement cannot be unilaterally terminated. It requires the mutual written agreement of both you and your real estate advisor unless otherwise stated.

• Ensure Transparency: As a final measure of clarity, your agent is obligated to disclose to you in writing, before any payment is made, the final amount or rate of any compensation offered by the seller's agent or broker. This number will typically be located on your closing statement.

Contact me for a consultation on navigating this new contract framework and securing your next sophisticated property in the Indianapolis area. My commitment is to competence, transparency, and a client-first approach.