Buyer Broker Agreement: What Homebuyers Need to Know

If you are ready to hire a real estate agent and enter the job market, you may be presented with a buyer-broker agreement. This document outlines the expectations of your real estate agent while also giving them the right to represent you. Some buyer-broker agreements give your agent exclusive access to help you buy a home, with penalties if you end the contract early. 

Buyer-broker agreements were becoming increasingly common and are now required in several cases because of the 2024 NAR settlement. Your real estate agent may ask you to sign one of these agreements before they show you any homes, even virtually.

This guide will cover everything you need to know about a buyer representation agreement. Learn what is included, how these agreements work, how to terminate them, and the pros and cons of using them. You can feel more informed as you enter the real estate market and hire your Realtor. Know what you are agreeing to and how it changes the buying process. 

What Is a Buyer Broker Agreement?

A buyer-broker agreement is a formal contract between a homebuyer and a real estate agent. Even though you might feel like the agreement is between you and your Realtor, the contract is actually with the brokerage that your agent works for. Here are a few things that are covered in these agreements: 

• Responsibilities: These contracts outline what the real estate agent will do to help you find and acquire real property. 
• Buyer broker compensation: They highlight how the Realtor and brokerage will get paid and how much. 
• Duration: They explain how long you are expected to work with the real estate agent and brokerage. If your home purchase takes longer than expected, the process may outlast the contract, and you may be able to change agents. 

These agreements will go into significant detail into each part of the real estate transaction and what your agent will do for you. It will also cover all responsibilities you have as a buyer to support the process and compensate your Realtor. 

How Does a Buyer Broker Agreement Work?

Many real estate agents will be happy to meet with you to discuss your home-buying needs. You can interview these agents to see if they would be a good fit and discuss their experience and recommendations for the buying process. All of this can be done without a contract. However, as soon as you decide to start touring homes and a prepared to make offers, your agent will likely present a buyer-broker agreement.

This contract allows you to officially enter into a professional relationship with the real estate broker and the agent who works with you. In most cases, these contracts last between 90 days and six months. However, some contracts are as short as 30 days or as long as a year – it all depends on the brokerage and best practices in the area. If the contract expires before you buy a property, your agent may ask you to sign a new one, or you might be able to end the agreement, depending on where you are in the buying process. 

These agreements also tend to be regional. For example, if you are considering moving to either Charlotte or Asheville, North Carolina, you might work with two different agents because one Realtor cannot represent the entire state. However, some Realtors might not want to enter into an agreement with a buyer who doesn’t even know if they want to move to that specific area.

Make sure you read the buyer-broker agreement carefully before signing it and ask about any parts that are vague or confusing. You can also ask a real estate attorney to review the contract to make sure it’s fair. 

Types of Buyer Broker Agreements

One important thing to remember is that not all buyer-broker agreements are the same. You might enter into a specific contract with a real estate licensee that has certain provisions depending on how you plan to buy a home. Some agreements allow you to work with more than one broker, while others prohibit you from hiring multiple agents. Here are your options. 

• Exclusive right to represent: This is the most common broker compensation contract. This exclusive agreement gives the Realtor the sole right to help you buy a house. You cannot work with other agents to tour properties or make offers.  
• Non-exclusive, not-for-compensation: With this option, the buyer agrees to cover the compensation of the agent (if the seller does not) as long as they help them get an offer accepted and close on the home. The buyer can work with multiple agents with this contract, but only one gets paid. 

These agreements prevent buyers from using Realtors to tour homes and make offers, only to fire them once the offer is accepted. It wouldn’t be fair for a buyer to fire a Realtor the day before closing and not pay their commission. With buyer-broker contracts, you will need to pay your Realtor if the agent helps you get an offer accepted and the deal goes through. 

What Does a Buyer’s Agent Do?

This written agreement can be a useful tool for learning what your real estate agent will do for you to streamline the buying process. It should explicitly state the responsibilities of the agent and the brokerage that supports them. Here are a few common tasks of buyers’ brokers. 

• Finding listings: while many buyers can search for houses on apps like Zillow, agents can find more information on specific properties through the multiple listing service (MLS). 
• Scheduling showings: your real estate agent is responsible for coordinating showing times that work for you and the sellers. 
• Advising on offers: while real estate agents cannot tell you what to do with your money, they can offer insight and advice to help you make informed decisions. 
• Negotiating: your Realtor should have strong negotiation skills to help you get a fair price on the home while also navigating the sales contract. 
• Guiding you through closing: your Realtor will help you work through every aspect of the home purchase process from the first showing until you leave the closing table.

Real estate agents and brokers have a fiduciary duty to the buyer once the agreement is signed. This means they must act in the financial best interest of the buyer. A Realtor cannot steer you toward more expensive or lower-quality properties because they would personally benefit from the sale. They need to help you find the right property that meets your needs. 

What’s Included in a Buyer Broker Agreement?

Your agent should never ask you to sign a buyer-broker agreement without discussing everything included inside. It is unethical to sign a written agreement unless you know exactly what you are consenting to. Here are a few sections included in these contracts that both the buyer and the Realtor agree to. 

• Duration of agreement: Make sure you have a clear contract duration that specifies the expiration date of the agreement.  
• Services to be provided by the agent: The written contract should list exactly what your Realtor and real estate broker will do for you. 
• Buyer responsibilities: The agreement will also state what is expected of the buyer to move the home sale forward. For example, the buyer may need pre-approval from a lender before the Realtor agrees to show them homes. 
• Compensation details: Your agent should specify whether they will receive a flat fee for their services, a percentage commission on the home purchase, or an hourly rate.
• Any limitations: There might be some limits to the properties the agent will show, including the location of the homes (if you are looking in multiple areas) and the types of properties. For example, some agents might specialize in condos while others focus on single-family homes. 
• Termination clause: This explains the rights of all parties to walk away from the contract and end their professional relationships. The buyer may need to pay some fees to cancel the agreement or may still need to pay commission to the Realtor if they are under contract to purchase a home. 

Even though you are locked into the buyer-broker agreement through its duration, there are still opportunities to cancel the agreement. Most agents don’t want to keep working with a buyer who doesn’t want to work with them. 

Are Buyer Broker Agreements Required?

As part of the 2024 NAR settlement, buyers are required to enter into written agreements with agents before they start touring homes. This is meant to protect the buyer so the real estate agent does not try to charge extra for services rendered.

Buyers also have recourse if the Realtor does not fulfill their duties to help until the end of the buying process. Brokers and agents can also benefit from these contracts because they can get paid fairly for their work. The contracts promote transparency in compensation and services provided.  

Buyers do not need these agreements to simply meet with Realtors or attend open houses. If you are still deciding where you want to buy, you can attend open houses to get a feel for specific neighborhoods and learn about different communities. Once a potential buyer wants to move toward attending private showings, they will need to sign one of these agreements. 

Pros and Cons of Signing a Buyer Broker Agreement

Many real estate agents have been happy to adopt buyer-broker agreements, and most buyers have also had positive experiences with these contracts. However, they aren’t perfect. Here are a few benefits and drawbacks of singing a legal agreement before exploring property listings.  

Pros

• All parties have clear expectations for what is expected of them. Realtors know what they need to do to fulfill their contracts, and buyers know what services to expect and how to pay for them.  
• You can receive prioritized attention from your agent. You will no longer be a prospect to your Realtor whom they may or may not work with. It is clear that you chose them to help you buy property. 
• There is improved trust and accountability. Everyone is on the same page in the buyer’s search for real property. 

Cons

• These contracts may limit your flexibility to switch agents. If you have a bad experience, you might be able to change agents in the same real estate offices, but it’s harder to switch brokerages.
• The buyer may be responsible for agent fees if the seller doesn’t offer commission. The contracts are explicitly about agent compensation. If the seller doesn’t cover commission in the closing costs, the buyer may need to pay the agent directly.
  
• The cancellation process will vary from one brokerage to another. It may be harder to get out of some contracts than others. 

These contracts are now mandatory for many regions, brokerages, and agents. This means you will have to decide whether signing an agreement has more benefits than drawbacks, or you will need to decide if you are confident enough to represent yourself. 

What to Know Before Signing?

Never sign a contract without carefully reading through it first. It’s okay if you need extra time to read each section and review what it means. While many real estate brokerages take steps to write their agreements in natural language (with limited legal jargon), there might still be some parts that are hard to understand. Here are a few best practices to keep in mind. 

• Ask your agent to review each section with you. They should be able to clearly explain what each part means. 
• Consider reaching out to a third-party for help. A trusted friend or a real estate attorney can review the contract and confirm it’s fair. 
• Ask questions about any parts you don’t understand. This can range from broker compensation options to cancellation.
• Understand your responsibilities. Know what is expected of you as the buyer. 
• Know what happens if a seller won’t pay the buyer agent fees. Have a plan in place in case you need to cover your broker’s pay. This could mean walking away from the property or agreeing to pay their commission. 

Take your time when reviewing these agreements. You should never feel rushed or pressured to sign them. There will be a lot of documents to sign throughout the home purchase process, so starting with healthy reading habits can help you move forward with confidence until you arrive at the closing table. 

Find a Trusted Real Estate Agent Through FastExpert

Contracts are not meant to trap customers with agents or trick people into making poor financial decisions. Instead, they serve as written documents to protect all parties and explain the expectations of each person. When you trust your real estate agent and have a buyer-broker agreement to protect yourself, you can start looking at local houses in your area. 

Turn to FastExpert to find local Realtors and interview them to help you enter the real estate market. This is a tremendous resource for learning about different real estate professionals and their skill sets. You control who you contact and how you communicate with them. You can also decide which agent is right for your needs. 

Try FastExpert today and start talking to local Realtors in your area. You can find a great house that meets your needs and have a positive buying process along the way.