Buyer-Broker Agreements Are Now Required. Here's How They Work
A big change in real estate means homebuyers now need to sign a buyer-broker agreement before touring homes. This written contract outlines how your agent gets paid and what you can expect from each other — and it's now required for most property showings.
A recent legal settlement means homebuyers need a contract, or “buyer-broker agreement,” before their buyer’s agent shows them listings.
This is new for most buyers — and real estate agents. In the past, an agent simply met the buyer at a home and called it good. The informal nature of buyer-broker relationships changed forever, though, thanks to a settlement agreement between the National Association of Realtors (NAR) and the Department of Justice (DOJ).
Previously, 18 states required this written contract, which varied in language. However, post settlement, NAR now requires real estate agents showing properties advertised on the Multiple Listing Service (MLS) to have their buyer client sign a buyer agency agreement before showing them properties for sale.
The New Buyer-Broker Agreement Requirement Explained
The National Association of Realtors has always advocated for buyer-broker agreements to be standard practice, though some buyer’s agents don’t use them consistently.
That’s all changed. Now, a written and signed agreement is mandatory when a buyer hires a real estate agent who participates in a Multiple Listing Service (MLS) to help them buy a home. The new policy went into effect Aug. 17, 2024, following NAR’s landmark $420 million antitrust commission lawsuit settlement. A federal judge granted final approval for the settlement agreement in November.
When Do I Need To Sign A Buyer-Broker Agreement?
You must sign a buyer’s agency agreement before touring — both in person or virtually — any homes listed for sale on the MLS. If you’ve already found a property on your own and need an agent to help you write an offer, then the agreement needs to be signed at that time, before they serve you.
What Must Your Agreement Include?
New regulations require the following elements in buyer-broker agreements.
Clear payment terms: The amount of compensation the agent will receive from any source — and how the fee will be determined — must be spelled out in the agreement. It also cannot be open-ended (for instance, “an amount the seller offers”) and must state that broker commissions are fully negotiable and not set by law. The terms must also state that the agent may not receive compensation from any source that exceeds the agreed-upon amount with the buyer.
Dates: Your agreement should also include a start and end date for working with your buyer’s agent.
Termination: Terms by which you can end the agreement.
State-specific items: Any additional clauses and disclosures required by state law where you’re buying property.
What Should Your Agreement Include?
In addition to the required terms and conditions around agent compensation, here are other key items that should be in the buyer-broker agreement.
Your obligations: For an agreement to be enforceable and valid, it needs to list out the responsibilities of both parties throughout the process. Make sure you confirm what your agent is requiring of you based on your contract. This can include guaranteeing your availability for showings and meetings within reasonable working hours, communicating about properties solely through your agent (versus contacting the listing agent or the seller directly yourself), and providing accurate, truthful information about your personal and financial status. Some agreements may also include language that makes you acknowledge that you cannot ask your agent to break laws like the Fair Housing Act in the course of working with you.
Your agent’s obligations: Generally, buyer-broker agreements will include language stating that your agent will help you navigate all parts of the home-buying process with professional care and due diligence. The contract also details what services you’ll get, depending on the commission. Some brokers offer discounted fees, which typically means reduced service.
Representation type: Each state operates a little differently, but how you are represented by your agent matters. For example, some states allow dual agency, where one agent represents both sides of the transaction (the seller and the buyer). Clarify whether they will represent you alone, or if your agreement permits them to represent the seller, too.
Exclusive vs. non-exclusive: Ask if your agent’s agreement prohibits you from working with other real estate agents to help you buy a home. Most real estate agents will require an exclusive agreement for a set time to ensure they are paid for their work and time.
Retainer fee: You may be required to pay a retainer fee upfront to hire your agent. This fee may be refundable at closing or non-refundable if your contract term runs out and you don’t buy a home. Some agents may also ask that you pay a fee “per door opened” or “per contract submitted.”
Protection period: Some agreements may require you to pay your agent if you buy a home they showed you in person or online (even if you don’t use them to complete the purchase). This clause may be voided if you enter into a signed buyer-broker agreement with another agent or after a certain amount of time has passed.
Property type and location: Often, a buyer-broker agreement will specify what type of property or what location the agreement is valid for. For example, you could sign an agreement with one agent to help you locate a residential property in a specific city, but could enter into a second agreement with a different agent to buy a residential property in a city 500 miles away. Or you could have one agreement for a residential property and a separate agreement with a different agent for a commercial property.
Navigating the Path Forward: Final Thoughts on Buyer-Broker Agreements
Ultimately, a buyer-broker agreement is designed to protect both you and your real estate agent. By clearly outlining the terms of your agreement in writing, both parties understand what is expected of them and can avoid misunderstandings or costly issues.
Review the terms of your agreement prior to signing and ask your potential agent the right questions. This helps ensure the agreement is mutually fair — and protects everyone while you work together.
