Buyer's Agent

A buyer's agent, also called a buyer's broker, is the real estate professional who represents or otherwise provides brokerage services to the buyer in a home purchase: identifying properties, arranging tours, negotiating on the buyer's behalf and presenting the buyer's offers. Under the practice changes that took effect on 17 August 2024 as part of the National Association of Realtors antitrust settlement, a multiple listing service participant working with a buyer must enter into a written agreement with that buyer before the buyer tours a home.

One point of scope decides how far that rule reaches. It binds MLS participants and subscribers, which is what the settlement's own language says. An agent who belongs to no multiple listing service is not covered by NAR policy, although state law may independently require a written agreement and often does. So the accurate statement is that the requirement follows MLS membership rather than the job title, and a buyer should ask which rules their agent is operating under rather than assuming.

Two defined triggers decide when the agreement is needed, and both are narrower than they sound. NAR's own guidance explains that "working with" a buyer distinguishes participants who provide full or limited brokerage representation or services for the buyer, such as identifying potential properties, arranging for the buyer to tour a property, performing or facilitating negotiations on the buyer's behalf, or presenting the buyer's offers, from participants who simply market their services or just talk to a buyer, as at an open house. A participant working only as an agent or subagent of the seller is not working with the buyer, and needs no agreement with them.

"Touring a home" means the point at which the buyer, or the participant acting for the buyer, enters the house, and it expressly includes a participant entering a home to give a live virtual tour to a buyer who is not physically present. A home for this purpose is a residential property of not fewer than one and not more than four dwelling units. The agreement can be signed at any earlier point, but no later than that.

The four required terms, and why the third one is the important one. A written buyer agreement must contain a specific and conspicuous disclosure of the amount or rate of compensation the participant will receive, or how it will be determined, to the extent the participant will receive compensation from any source. It must state that amount in a manner that is objectively ascertainable and not open-ended. It must include a term prohibiting the participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed with the buyer. And it must carry a conspicuous statement that broker fees are not set by law and are fully negotiable.

The third term is the one worth understanding before signing, and it is reported least. It makes the agreement a ceiling rather than a disclosure. If the buyer agrees a figure and the seller separately offers the buyer's brokerage more than that, the excess cannot reach the agent under the agreement. That closes the arrangement in which a buyer's agent's pay rose with whatever the listing side chose to offer, which is the specific incentive the litigation was about. The second term does related work: an agreement saying the agent will receive "whatever the seller offers" is not objectively ascertainable, because the amount cannot be determined from the agreement itself.

What NAR policy deliberately does not dictate. It does not prescribe the type of professional relationship, which may be agency, non-agency, subagency, transactional or customer, subject to state law. It does not prescribe the term, which its own guidance illustrates as possibly one day, one month, one house or one zip code. It does not prescribe the services. And it does not prescribe the compensation, which its guidance illustrates as, among other things, zero, a flat fee, a percentage, or an hourly rate. Those four blanks are the negotiable surface of the document, and the term and scope are as worth attending to as the number, because a long exclusive agreement over a wide area binds a buyer to one professional for every property in it.

Two relationship labels a buyer will meet and should not confuse with representation. Dual agency is a single agent or brokerage acting for both the buyer and the seller in the same transaction; it is permitted in some states and prohibited in others, and a written buyer agreement is still required where the participant is working with the buyer. Transaction brokerage is a non-agency arrangement in which the professional facilitates the deal without representing either party's interests against the other's. Both are creatures of state law, both are disclosed on forms prescribed by state law, and neither is covered further here.

A buyer and an MLS participant agree the relationship type, the term and geography, the services, and the compensation, and sign before the buyer tours a home. The agreement governs what the agent may be paid from any source. If the seller is willing to contribute toward the buyer's side, that is negotiated away from the multiple listing service, or handled as a seller concession. At closing the agreed amount is disbursed, whether funded by the seller, by the buyer, or partly by each.

A hypothetical example of the ceiling, with invented figures. Priya signs a written buyer agreement setting her agent's compensation at a flat $9,000, for a term of 60 days covering a single named neighborhood. She finds a house whose seller has separately agreed, away from the MLS, to pay the buyer's brokerage $12,000. The agreement's required term prohibits the participant from receiving compensation for brokerage services from any source above the agreed amount, so $9,000 is what the agent may receive, and the remaining $3,000 cannot reach them under that agreement. Where it lands instead, whether it stays with the seller or becomes a concession to Priya, is a matter for the purchase contract rather than for the buyer agreement. NAR's guidance does contemplate that a new or amended agreement may sometimes be appropriate, and an amended one has to satisfy the same four requirements, so a request to raise the agreed figure part-way through a search is a fresh negotiation rather than a formality.

Run it the other way and the same term does nothing to help. If the seller offers $4,000, the agreement is not a floor, and Priya remains liable for the agreed $9,000 unless the document says otherwise. The gap of $5,000 is cash she has to find at closing, on top of her down payment and closing costs, or negotiate the seller into covering. That asymmetry, a ceiling on the agent and no floor for the buyer, is the practical shape of the document and the reason to read it before the first showing rather than after.

What the written agreement does for a buyer

• The price of representation is stated in dollars, in advance, in a document the buyer signs rather than discovers at closing.
• The ceiling on compensation from any source removes the incentive for an agent to steer toward listings offering more.
• The term, the geography and the services are all negotiable, so a buyer can limit the commitment to a single property or a short period.
• The mandated negotiability statement means no buyer can be told truthfully that the number is fixed by law or by custom.

What is harder about it

• The commitment is made before touring, which is the point at which a buyer knows least about what the service will be worth.
• It is a ceiling on the agent, not a floor for the buyer, so a seller contributing less than the agreed figure leaves the buyer owing the difference in cash.
• A long exclusive term over a wide area can bind a buyer to one professional for months across every property in it.
• The requirement follows MLS membership rather than the job title, so the protections do not automatically apply to every professional a buyer meets.
• Relationship labels vary by state, and a form headed "agreement" may describe non-agency facilitation rather than representation.