As of August 17, 2024, a landmark settlement by the National Association of Realtors (NAR) changed the rules for buyer's agents across the United States. Buyers must now sign a written buyer broker agreement before touring homes with an agent — and that agreement must specify, in writing, the compensation the agent will receive. This is a significant shift from the prior system, where buyer's agent commissions were typically paid by the seller through the listing agent and were often invisible to buyers. The change means buyers are now explicitly party to a compensation agreement with their own agent. Before you sign, you need to understand what you're agreeing to: what the agent's fee is, whether it is negotiable, what happens if the seller won't pay it, and what obligations you are taking on if you walk away.
What is a Buyer Representation Terms?
A buyer broker agreement (also called a buyer representation agreement or buyer agency agreement) is a contract between a home buyer and a real estate agent or brokerage. It defines the scope of the agent's representation, the duration of the agreement, the geographic territory or properties covered, and — critically, since the NAR settlement — the compensation the buyer agrees to pay the agent if a transaction closes. The agreement may be exclusive (you can only work with this agent during the term) or non-exclusive. Compensation structures vary: flat fee, percentage of purchase price, or hourly rate. Under the NAR settlement, the amount must be a specific dollar figure or percentage — not 'whatever the seller offers'.
Red flags to watch for
A long exclusive agreement locks you into a single agent even if the relationship isn't working. Negotiate for a shorter trial period (30-90 days) with a right to terminate if you're not satisfied.
Post-NAR settlement, this language is no longer permitted. Compensation must be a specific, agreed amount. Vague or open-ended commission terms are non-compliant with the new rules.
If the seller won't pay the buyer's agent fee, some agreements require the buyer to cover the shortfall. This is now disclosed upfront — but many buyers don't realise they're taking on this obligation.
If you buy any property — even one you found yourself — during the agreement period and it's exclusive, you may owe commission to the agent.
If you are unsatisfied with your agent's service, you need a right to terminate the agreement. Without one, you may remain contractually bound even through a breakdown in the relationship.
Your legal rights
The NAR settlement (approved by federal court in November 2024) requires all MLS-member brokerages to use written buyer broker agreements that clearly disclose compensation before home tours. State real estate licensing laws also apply — most states require buyer agency agreements to be in writing to be enforceable. The Real Estate Settlement Procedures Act (RESPA, 12 U.S.C. § 2601) prohibits kickbacks and fee-splitting arrangements that inflate costs for buyers. You have the right to negotiate the commission rate, the term of the agreement, the exclusivity scope, and the termination conditions. RESPA also requires a Loan Estimate and Closing Disclosure that itemise all transaction costs.
Questions to ask before you sign
- 1What is your commission rate, and is it negotiable?
- 2If the seller won't pay your commission, am I obligated to pay the difference?
- 3Is this agreement exclusive, and what properties or transactions does it cover?
- 4How long is the agreement, and can I terminate if I'm not satisfied with your service?
- 5What services do you commit to providing in exchange for your commission?
- 6What happens to my obligations if I find a property myself or through a different channel?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.