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Understanding The Buyer’s Brokerage Agreement

Dear Phyllis,

My wife and I are in a two story home and we think the time is nearing that we should move to a single story. We have a Realtor we have known for years.  A new listing in our neighborhood just came on the market and I texted him to see the home. Before even looking at the home, he told me I had to sign a paper stating he was representing us.  And that if the seller didn’t pay his commission we would have to pay him ourselves. Although he explained that this is because of the National Association of Realtors lawsuit I was insulted. We have known him for more than twenty years and when we helped our daughters buy their first home, we hired him for that too. Am I right in feeling insulted?  DK

Dear DK,

I understand that discussing a Buyer’s Brokerage Agreement can feel uncomfortable, especially with long-time relationships. However, this agreement has become a requirement for all Realtors using the Multiple Listing Service (MLS). Additionally, they can be fined if they show you a home prior to signing this agreement. I understand that you feel insulted but your Realtor is simply following very strict rules.

As members of the MLS this agreement must be signed before a buyer tours a home—whether in-person or virtually—to provide transparency about services and costs. However, if you’re simply speaking to an agent at an open house or inquiring about their services, a signed agreement isn’t needed. Agent compensation remains fully negotiable for both buyers and sellers.

A Buyer’s Brokerage Agreement is a contract between a buyer and their real estate agent that outlines exclusive representation, services provided, compensation terms, agreement duration, and cancellation options. It can also state that it is only for the home you want to see. It ensures the agent’s commitment to prioritizing the buyer’s interests and clarifies responsibilities on both sides.

Best regards,

Phyllis