If you’re a homebuyer collaborating with a real estate agent who’s a REALTOR®, it signifies you’re partnering with a professional ethically bound to prioritize your best interests. As of August 17, 2024, you’ll be required to sign a written buyer agreement after selecting the professional you wish to work with. Here’s what you should understand about these agreements.
What is a “Written Buyer Agreement?” What Does it Do?
A written buyer agreement is a contract between you and your real estate professional that details the services they’ll provide and the compensation they’ll receive for those services. It clearly outlines the responsibilities of both parties involved in the home buying process.
Why Am I Being Asked to Sign an Agreement?
Written buyer agreements became a nationwide mandate for many real estate professionals as part of the National Association of REALTORS®’ proposed settlement of litigation concerning broker commissions. This requirement took effect on August 17, 2024.
Are These Agreements New?
In some areas, yes. Many states have required them for years, while others have not. Consequently, you or people you know may not have encountered them recently. Nevertheless, they’re now a nationwide requirement for many real estate professionals.
Are These Agreements Negotiable?
Absolutely! You should feel confident in negotiating any aspect of the agreement with your real estate professional. This includes the services you desire, the agreement’s duration, and any compensation. Compensation between you and your real estate professional is negotiable and not dictated by law. The written agreement must clearly define the compensation (e.g., $0, X flat fee, X percent, X hourly rate)—it cannot be open-ended or presented as a range. Only sign an agreement that reflects what you have agreed to with your real estate professional.
How Do I Benefit from These Agreements?
These agreements explicitly specify what services you (as a homebuyer) expect your real estate professional to deliver, and how they’ll be compensated. These agreements provide clarity and minimize potential misunderstandings at the start of your relationship with your real estate professional. They help ensure a transparent and mutually beneficial working arrangement.
When Do I Need to Sign an Agreement?
You’ll be asked to enter into a written buyer agreement with your real estate professional before “touring” a home with them, whether in-person or virtually. If you’re simply visiting an open house independently or inquiring about a real estate professional’s services, you don’t need to sign a written buyer agreement. This ensures that you have a clear understanding of the representation you’re receiving before engaging in property viewings.
Does This Mean I Have to Pay My Real Estate Professional Out of Pocket?
Not necessarily. While you are responsible for paying your real estate professional as outlined in your agreement, you can still request, negotiate for, and receive compensation for your real estate professional from the seller or their agent. The source of compensation can be discussed and agreed upon during the negotiation phase.
Do Agreements Dictate a Specific Type of Relationship I Need to Have with My Real Estate Professional?
No—you’re permitted to enter into any type of business relationship with your real estate professional that’s allowed by state law where you reside. The agreement should reflect the specific representation arrangement that best suits your needs.
Can I Change or Exit an Agreement?
Yes. You and your real estate professional can mutually agree to modify your agreement. Agreements may include specific conditions for termination, so review the agreement’s text and discuss any desired changes or termination with your real estate professional.
In conclusion, written buyer agreements are designed to clarify the relationship between homebuyers and their real estate professionals. They provide transparency, protect the interests of both parties, and ensure a smooth and successful home buying experience. Remember to read the agreement carefully, negotiate terms that work for you, and consult with your real estate professional or an attorney if you have any questions. By understanding the terms of these agreements, you can confidently navigate the real estate market and achieve your homeownership goals.
Practices may vary based on state and local law. Consult your real estate professional and/or consult an attorney for details about state law where you are purchasing a home. Please visit facts.realtor for more information and resources.
