Your Buyer Agent Needs You to Commit

It’s really happening: just as clients who are selling their homes with an agent need to sign a contract, buyers are finally being asked to do so as well when seeking the services of a licensed agent. In fact, there are now regulations in place through the National Association of REALTORS® (NAR) and laws in many states requiring that any agent showing a property to a buyer have a written agreement in place beforehand. These agreements can take many forms, but this handy infographic provides a solid overview.

Buyer representation agreements, aka buyer broker agreements, are contracts between a real estate broker and a buyer in which the brokerage agrees to work on behalf of the buyer (both through advice and assistance with identifying potential homes and securing access rights to them), and the buyer agrees to ensure that the broker gets paid a commission for their services. If this concept sounds foreign to you, you’re not alone! Prior to a legal settlement that went into effect in 2024, most agents would work informally with buyers until they reached the point of writing an offer on a property — and even then, they would usually only commit to working with the agent for that transaction. If you’re wondering whether that led to agents showing many properties to many different people without any form of compensation…yes, that was definitely happening.

But agents sometimes not getting paid for their work wasn’t the root of the lawsuit and eventual settlement; on the contrary, it was the question of who was paying the buyer side commission and how that information was disclosed to all parties. (There were also claims that commission rates were artificially driving up home prices across the nation, but since the average commission rate actually decreased over the same amount of time, that was clearly incorrect). Before the settlement in 2024, the commission that sellers paid to their listing broker was customarily split with the buyer’s broker, and the exact amount of the split was advertised privately between brokers in the MLS. Some sellers felt that they were paying more than necessary since their commission was being used to compensate the agent representing the buyer, and buyers had no idea how much their agent would be paid until closing.

There were several scenarios in the old model that had the potential to harm consumers, such as agents potentially not showing listings that were offering low compensation splits, or encouraging buyers to make offers on homes that had “bonus” commission amounts. I didn’t come across this very often in my area, but it’s not hard to see how that could happen. Luckily, under the new guidelines, the amount of commission being paid to each agent and by whom will be much more clear, and while sellers have so far been willing to pay the buyer agent commission on behalf of most of my clients, that topic is now outlined in the offer to purchase so there are no surprises. Brokers can no longer advertise the amount of commission a seller is willing to pay on behalf of a buyer on the MLS, which will hopefully put all listings on a level playing field with buyer agents.

Two important exceptions to the buyer broker agreement rule are 1) that a listing agent MAY show their own listing to a buyer with whom they do not have a contract and 2) no contracts are needed for buyers attending an open house even if it is hosted by an agent other than the listing agent. In other words, if you’re a buyer who isn’t yet represented by an agent, you can schedule a showing directly with the listing agent or attend an open house. This can be very helpful for evaluating agents and viewing homes before you’re ready to commit, although some agents fear that it will lead to an increase in dual agency (where one broker or agent represents both parties in a transaction). There will always be bad actors who try to find a way around the rules, but the general hope is that having open and honest discussions about commission, and about commitment between client and agent, will lead to a higher standard of service for consumers.