A Buyer Representation Agreement is functionally similar to the Listing Agreement. Both contracts create an agency relationship between the client and the agent. The contract establishes the purpose of the agency relationship (You are all limited agents. When someone hires you, you don’t become their power of attorney; you can’t sign legal documents for them, you can’t make medical decisions, etc. You only do the limited things the contract says you can do: help them buy/sell a house). This purpose can be as broad as “I want to buy a house I can afford” or as narrow as “I want to buy a 5 bedroom, 3 bath, split-level built after 2000 somewhere in Benton County.” The purpose defines roughly what an agent can do and where they can do it. If an agent is asked to help the client look for residential properties and they keep showing the client non-residential industrial parks against the client’s wishes, that agent is not acting properly and can be disciplined.
Beyond that, the agreement sets up the duties of the agent (to help buy a house, usually, as well as the agent’s fiduciary and ethical duties), and the duties of the client (to cooperate with agent and provide accurate, rapid responses to agent questions). It sets up the timeframe for the representation, and it establishes how the agent will be paid. In the Buyer Representation Agreement, an agent gets paid by the Buyer at successful closing; however if the Seller’s Agent offers a Buyer’s Agent Commission (BAC), the client’s obligation to pay their broker is reduced by that BAC.
Buyer agents with representation agreements additionally have an established timeframe after the agreement is terminated where they are contractually due payment if the Buyer ends up purchasing from someone the Buyer Agent introduced the Buyer to during the agreement. There are regular stories around the nation of agents who work with a client for months, then the day after the representation ends, the former client goes under contract on the first house the agent showed them. In most cases, it’s clear that the client was simply waiting out the agent to avoid paying them. Hence, representation agreements typically create a contractual “procuring cause” timeframe of around 180 days after termination (note this is for the purposes of the contract between buyer and agent and does not determine “procuring cause” in an NAR BAC arbitration dispute between two buyer’s agents).
Speaking of terminations, the Oregon REALTORS® Buyer Representation Agreement establishes an optional “early termination fee” if the contract is terminated early by the buyer. The parties can write in any number (including 0) or leave it blank. Under this agreement the early termination is not a breach of contract and the fee is not a penalty. Rather the early termination fee is an agreed upon amount that the parties believe is reasonable for the buyer to pay in order to 1) have the right to terminate early without breaching the contract and 2) reasonably compensate the broker for their risk, time, materials and efforts expended.