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.
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.
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.
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.
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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.
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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:
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.
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.
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.
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.
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!
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.