First-time homebuyer mortgage advice Real estate agent commission negotiation tips Understanding mortgage options for homebuyers Navigating the homebuying process with a real estate agent First-time homebuyer steps before signing a buyer-broker agreement How to choose a real estate agent for first-time homebuyers Understanding buyer-broker agreements What is the best mortgage option for first-time buyers? How to negotiate real estate agent commission Steps to take before signing a buyer-broker agreement How to avoid paying buyer’s agent commission out of pocket Benefits of working with a real estate agent in 2024 Impact of NAR settlement on homebuyers Tips for handling real estate agent commissions under new laws Mortgage tips for first-time homebuyers with low credit scores
First-time homebuyer mortgage advice Real estate agent commission negotiation tips Understanding mortgage options for homebuyers Navigating the homebuying process with a real estate agent First-time homebuyer steps before signing a buyer-broker agreement How to choose a real estate agent for first-time homebuyers Understanding buyer-broker agreements What is the best mortgage option for first-time buyers? How to negotiate real estate agent commission Steps to take before signing a buyer-broker agreement How to avoid paying buyer’s agent commission out of pocket Benefits of working with a real estate agent in 2024 Impact of NAR settlement on homebuyers Tips for handling real estate agent commissions under new laws Mortgage tips for first-time homebuyers with low credit scores

By Ashley Gower

Aug 23, 2024

Why These Agreements Matter in Today’s Real Estate World

When you’re in the market for a new home, understanding your relationship with your real estate agent is essential. One of the key elements of this relationship is the Exclusive Buyer-Broker Agreement. This legally binding contract sets the expectations for both you and your agent. As of August 17, 2024, new federal legal requirements have made these agreements mandatory for all real estate agents who use the MLS (Multiple Listing Service). So, what does this mean for you as a homebuyer?

Whether you’re buying your first home or your fifth, this agreement offers clarity, protection, and peace of mind in an otherwise complex process. Let’s break down what you need to know—so you feel confident and empowered as you step into the world of real estate.

  • Buyer-Broker Agreement: A legally binding contract that ensures your real estate agent is fully committed to representing your best interests.
  • Transparency & Protection: The agreement outlines responsibilities, clarifies expectations, compensation, and ensures your agent works in your best interest.
  • New Legal Requirements: As of August 17, 2024, signing this agreement is mandatory before viewing homes, and buyer’s agent commissions must be negotiated upfront to sign.
  • Benefits for Homebuyers: Provides clarity, access to resources, and legal protection during your homebuying journey.
  • Work with Your Lender Early: Involving your lender early helps you understand financing options, including how to cover your agent’s commission if necessary.
  • Options for Paying Agent Commissions: Explore alternatives like seller concessions, adjusting the sales price, or using cash reserves if the seller won’t cover the fees.

What is a Buyer-Broker Agreement?

Whatever you want to call it, an Exclusive Buyer-Broker Agreement, Buyer Representation Agreement, Buyer Agency Agreement, or Buyer Agent Agreement, etc., they’re all the same. At its core, a Buyer-Broker Agreement is a legally binding contract between you (the buyer) and your real estate agent. Think of it as a mutual promise—a commitment that they will represent you, free from conflicts of interest, with your best interests at heart, and in return, you agree to work exclusively with them. It’s all about clarity.

What’s Changed with the NAR Settlement?

As of August 17, 2024, due to an antitrust lawsuit, the National Association of Realtors (NAR) was a part of, federal law now mandates that an Exclusive Buyer-Broker Agreement must be signed before an agent shows any property. Previously, this wasn’t required in every state, but now it’s standard practice nationwide.

One of the significant changes is that your agent’s commission may no longer be paid by the seller’s agent. Instead, you’ll negotiate with the seller to cover your agent’s fee, which could affect your overall offer and negotiations. Additionally, listings on the Multiple Listing Service (MLS) no longer display the buyer’s agent’s compensation, so your agent will need to gather this information for you directly from the listing agent.

While this might sound like an extra layer of complexity, it’s designed to ensure transparency and fairness in the real estate process—so you always know who is working for you and how they’re being compensated.

Why Should I Sign A Buyer-Broker Agreement?

In today’s real estate landscape, transparency is crucial. With a Buyer-Broker Agreement, both you and your agent are on the same page regarding responsibilities and expectations. It can be comforting to know that your agent isn’t just opening doors—they’re actively protecting your interests, making sure you don’t overpay, miss important timelines or details, or fall into common traps during the homebuying process.

But there’s more. Many agents are self-employed and rely solely on commissions for their income. By signing this agreement, you’re ensuring that your agent is compensated for their hard work and dedication. After all, you want an agent who is as committed to helping you succeed as you are to finding the perfect home.

You might hear the terms “real estate agent” and “real estate broker” used interchangeably—but they’re not quite the same thing. Your real estate agent is the one who helps you view homes and works directly with you during the buying process. A real estate broker, on the other hand, has more advanced education and licensing. They often oversee multiple agents and manage real estate offices.

In some cases, your agent might also be a broker. If not, they work for one. Either way, rest assured that both are there to ensure your homebuying journey goes smoothly.

Why Work with a Real Estate Agent?

  • Contracts and Support: Agents assist with disclosures, contracts, and deadlines in today’s regulated environment, guiding you through every step to reduce stress and provide peace of mind.
  • Market Expertise: A real estate agent offers deep local market knowledge, helping you find the best properties and advising on fair market prices.
  • Objectivity: Agents offer an unbiased perspective, helping you meet your goals within budget and avoid emotional attachments when buying or selling.
  • Time-Saving: With MLS access and industry connections, your agent quickly identifies properties that fit your needs, saving you countless hours.
  • Negotiation Skills: Your agent negotiates to get you the best deal, whether it’s lowering the price or securing favorable contract terms.

Your agent is a key player in your real estate transaction, alongside your lender. We’re here to guide you in making one of the biggest financial decisions of your life.

Call today! We’re happy to discuss how we can support you!

Key Elements of a Buyer’s Agent Agreement

When you sign a Buyer’s Agent Agreement, it will typically include the following key components:

Term Length: The agreement will specify how long you’ll be working exclusively with your agent. It could be for one home showing, 30 days, 90 days, six months, or another timeframe that fits your needs. You can always sign another one if you’d like. This ensures that both you and your agent are fully committed for the duration of the homebuying process.

Termination Rights: No one likes the idea of “breaking up,” but if things aren’t working out, the agreement will spell out how either party can end the relationship. Make sure you understand the conditions under which the agreement can be terminated, such as notice periods or potential compensation owed to the agent.

Exclusivity: By signing this agreement, you’re agreeing to work solely with your agent or their brokerage. If that sounds daunting, don’t worry—it’s all about ensuring your agent can focus on giving you the best service possible. 

Compensation: Traditionally, the seller pays both agents’ commissions. However, that’s not guaranteed, and you may need to negotiate or contribute toward your agent’s commission if the seller doesn’t cover it. Your lender can help you understand financing options for this. More on that later.

Property Specifications: This section lays out what you’re looking for in a home—such as price range, neighborhood, and type of property. It’s a way to ensure your agent knows exactly what you need and keeps their searches within your criteria.

Agent Duties: Your agreement will outline your agent’s responsibilities—from finding and showing homes to handling offers, negotiating, and following through until closing. This is where you set the tone for communication and what you expect from each other.

Pro TIP: Let’s look into down payment assistance programs to help with your financing!
Whether you are the one needing to pay agent fees, or not, we can search for opportunities for you to save money!

Benefits of an Exclusive Buyer-Broker Agreement for Homebuyers

At first you might wonder why you should sign this agreement. Isn’t it just another formality? It’s much more than that—it’s a crucial step to ensure that you and your real estate agent are aligned. Here’s why it benefits you:

  1. Clarity and Transparency: From the beginning of your relationship, the agreement outlines what services your agent will provide, so you know exactly what to expect.
  2. Your Interests Come First: Your agent is legally bound to act in your best interests—whether that means negotiating better terms or ensuring you don’t overlook any potential issues during your homebuying process.
  3. Protection: Both you and your agent are protected under the agreement. This means that if any legal issues arise, the terms of the contract will help clarify each party’s responsibilities.

Work With Your Lender Early!

But here’s the good news: you don’t have to figure this out alone. Your lender is a key player in helping you understand all your financing options, even before you sign the Exclusive Buyer-Broker Agreement. By working with your lender early in the process, you can get a clearer picture of how your financing could work—including how your agent’s commission might be covered.

Paying Your Real Estate Agent: What Are the Options?

We know that paying your agent’s commission can feel like one more possible daunting cost in an already expensive process. When you’re juggling earnest money deposits, down payments, and closing costs, the idea of covering one more fee might add another layer of stress—especially with a challenging housing market.

For many buyers, the ideal scenario is having the seller pay your agent’s commission. This can be a major relief. Depending on the market and the specific property, seller concessions—or contributions from other interested parties like builders, agents, or lenders—could cover your agent’s fees, leaving you with fewer out-of-pocket expenses.

What Happens if the Seller Refuses to Pay Buyer’s Agent Commission?

Don’t worry, you’ve got options. If you do need to cover agent commissions, don’t panic—your lender can help you explore options for managing this expense.

Five Options to Handle Buyer’s Agent Fees:

  1. Seller Concessions: This is the ideal scenario where the seller agrees to cover your agent’s commission.
  2. Increase the Sales Price: You can raise the home’s purchase price and ask the seller to pay your agent. Your appraisal will need to support the higher price.
  3. Adjust Your Down Payment: Lower your down payment and use some of the funds to pay your agent’s commission.
  4. Use Cash Reserves: If possible, you can pay your agent directly from your savings.
  5. A Combination: Sometimes, the best option is a mix of the above—work with your lender to find a solution that works for your finances.

It’s important to have open discussions with your agent and lender to fully understand these options and decide what works best for you.

Your lender also plays a crucial role in building confidence with the seller’s agent. Throughout the homebuying process, your lender should be in close contact with the seller’s listing agent, making sure they know that you’re a serious and qualified buyer. This can go a long way in reassuring the seller that by accepting your offer, they’re choosing a buyer who’s financially stable and ready to close. When your financing is solid and your lender is advocating for you, sellers may be more inclined to assist with agent fees or other concessions to seal the deal.

Final Thoughts: The Value of a Good Homebuying Team

When it comes down to it, a great buyer’s agent does far more than open doors. They’re your advocate, your expert, and your negotiator—someone who is there to help you make one of the biggest financial decisions of your life.

By signing an Exclusive Buyer-Broker Agreement, you’re ensuring that your agent is just as invested in your success as you are. You’re establishing trust, clarifying expectations, and ensuring that your interests are represented every step of the way.

Ultimately, the goal is to work together with your agent, lender, and other key players to make sure you’re set up for success—both financially and emotionally—as you navigate the homebuying journey.

Reach out with any questions, or to get started on your homebuying journey!

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Please consult with the Loan Originator to discuss your options and to receive specific DPA information. You will need to apply for a first mortgage loan with NFM, Inc. in conjunction with any down payment assistance program. All information contained herein is subject to change at any time. A training class might be required. All DPA programs require to apply for a 1st and 2nd mortgage. Equal Housing Lender. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. 

These blogs are for informational purposes only. Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice. Should you have any questions about the information provided, please contact us.