As a result of the recent National Association of Realtors (NAR) settlement (Moehrl v. National Association of Realtors) as of August 17, 2024 real estate agents are required to have buyers sign a buyer representation agreement, or a showing agreement for one-off showings before engaging to work together. Previous to the settlement a buyer representation agreement was suggested, but not mandatory.

A buyer representation agreement, also known as a buyer agency agreement or buyer-broker agreement, is a contract between a home buyer and a real estate agent or broker. It establishes a formal relationship between buyer and agent and outlines the terms of their working relationship, including the services the buyer is entitled to, the agent's responsibilities, and how the agent will be compensated. The agreement outlines the scope, duration, property type and location and your agent’s compensation. 

Here are the 4 most important things you should know before you sign one: 

1. What you, as a buyer, are agreeing to do:

Essentially, the agreement is a commitment to work with your buyer’s agent throughout your home search. Your agent should review the terms of the agreement with you so you fully understand what you are agreeing to. The main components of the agreement are the responsibilities of each party, scope of services, duration of the agreement, property type and location, and your agent’s compensation. Keep in mind that your agent is typically not compensated until a property closes. They will be investing time into working with you as a buyer for no guarantee of income. This form provides your agent with some reassurance that they may eventually be compensated for their hard work helping you land the perfect property.   

2. What your buyer’s agent is agreeing to do: 

Your agent’s top priority is to act as your fiduciary. A fiduciary is a representative who has your best financial interests in mind. While a seller’s agent’s job is to make the seller the most money possible, your buyer’s agent will negotiate the best terms for you as the buyer. The buyer’s representation agreement is a testament to this. (On that note, a seller’s agent does not have your financial best interests in mind as they represent the seller, so it is not advisable to work directly with them.) Starting with a buyer consultation, our team specifically performs over 50 steps in a transaction - from creating a custom home search for you, to showing you properties, providing statistics on the market and analysis on specific properties, and drafting offers which will ultimately ensure you find a property that meets your specific criteria and goals. We do everything in our power to empower, educate and ensure a smooth transaction from search to closing for our clients. 

3. Who is paying the buyer’s agent commission - the buyer or seller?

This is both negotiable and dependent on the property. Sellers have a choice as to what commission they offer buyer’s agents. As of August 17th, most MLS’s (our MLS is excluded as they have a separate, pending litigation) are not allowed to advertise the commission a seller is offering a buyer’s agent. Luckily, as of now our MLS is still able to show commission rates which makes it a bit easier. When and if this is removed from our local MLS, it will be up to your buyer’s agent to find out what compensation is being offered by the seller and inform you accordingly. Sellers offering a buyer’s agent commission will help to incentivize buyers to consider purchasing the seller’s property, as essentially the property will cost the buyer less. If buyer agent fees are not included, buyers will have an additional expense on top of an already expensive purchase. All sellers will have different perspectives. All in all, this is one other term to negotiate now that agent commissions have been decoupled. Your agent can discuss strategies on how you can handle any discrepancies in their commission rate and what the seller is offering (or not) on a specific property. 

4. Is there an "out" from the buyer’s representation agreement? 

The duration of the contract is outlined in the terms of the agreement. That said, our team’s stance is that we want to work with clients who want to work with us and see our value as their real estate advisor and advocate. If a client is not a match with their agent and it’s just not working out, we understand that. Signing these agreements can be a bit like “Married at First Sight” - you may not know your agent isn’t a great fit for you personally until you see a few properties with them and get to know them better. We add terms into our agreements which outline what a mutual separation would look like for this reason. If you and your agent aren’t a great fit, the benefit of working with our team is that we have agents with various backgrounds, so we can help match you with the right agent that may be a better match for you.  We look at the bigger picture of our business - we are not here just to make a sale. We want our clients to be educated, understood, happy and ultimately to achieve their real estate goals. If it means switching agents or us challenging you not to purchase a property that we don't think is a good decision for you, we aren’t hesitant to do what’s ultimately best for you. 

When making one of the most significant financial transactions of your lifetime, you deserve an expert advisor to guide you through the process and protect your interests. Our team’s combined expertise and deep understanding of the local market and knowledge based on years of experience can assure you stay ahead of, and not behind, the real estate market. We will guide you through from the first showings through the closing process to ensure the process is as smooth and stress-free as possible. And, we are around to advise you on all things real estate-related forever forward. When the transaction ends, it doesn’t mean our relationship has to.