Buyer agency agreements

As part of a recent class action lawsuit settlement, the National Association of Realtors is implementing changes to practice standards, including requiring multiple listing service (MLS) participants to have a written agreement with buyers they are representing. This agreement must be in place prior to touring any property. 

The agreement explicates the agent’s responsibility to the buyer and the buyer’s obligation to their real estate broker. Agreements should be signed at first “substantive” contact, meaning when the parties first meet. This is also the same time that agents should be discussing the concept of agency and explaining whether or not they will represent both a buyer and a seller in the same transaction.

Agreements can be exclusive, meaning you work with one broker for the period of time the buyer agency agreement covers or they can be non-exclusive. If signing a non-exclusive agreement, there should be a list of properties that the agreement covers to avoid any confusion.

The agreement includes how much compensation the broker will be owed by the buyer at closing. Compensation is negotiable and not set by any law or dictated by the MLS. The agreement should clearly state how much (and whether it’s a fixed dollar amount or percentage of the sale price) the broker will be paid upon closing.

Additionally, the agreement prohibits brokers from receiving compensation in excess of what the buyer agrees to. As sellers are able to make offers of cooperation to buyer’s brokers if they want, this clause ensures that the broker doesn’t collect more money than they and the buyer agreed to in the contract.

The length of time the agreement is in effect is negotiable as well. You might commit to working with a broker for 1 week or 1 year. Agreements might contain a trial period. 

While real estate brokerages may choose to set policies regarding what commissions they charge and how long they want their buyer agency agreements to last, buyers should know that they can negotiate any terms that are not acceptable to them.

Of note, brokers who are showing their own listing as the seller’s representative or hosting an open house are not required to have buyers viewing their listing sign an agreement.

This is certainly a big change from how things have been done and like all change, it will take some time to get used to. We hope that it encourages transparency between brokers and their buyer clients and that it encourages buyer brokers to provide the level of professional service that is worthy of the commission they are charging.

We began implementing buyer agency agreements at the beginning of 2024 as we knew this decision was forthcoming. All of our active buyer clients have already signed one but if you are one of our less active buyer clients, we will be reaching out to you before we next show you a property to ensure we are in compliance with the new rules. As always, don’t hesitate to reach out with any questions!