What’s a Buyer Broker Agreement, And What Should You Know Before Signing One?

What is a buyer-broker agreement?

A buyer-broker agreement is a document that establishes a business agreement between the buyer (you) and your real estate agent’s supervisor (also known as the broker).

It’s used to protect both the buyer and the real estate agent representing them. It outlines the scope of work the agent will do for the buyer, while giving the buyer reassurance that the agent has their best interest at heart, McKnight explains.

If something goes wrong and you aren’t happy with the real estate agent you initially started working with, you can also ask the broker to assign a new agent to work with you.

Types of buyer-broker agreements

The buyer-broker agreement is an important — and legally binding — document that’s designed to protect both the buyer and the buyer’s agent. This agreement clearly outlines what the agent will do for you, which terms and conditions you’ll follow, and how the agent will be compensated, which depends on what kind of buyer’s broker agreement you have.

Exclusive right-to-represent contracts are the most common buyer-broker agreement. The document will outline what the agent will do for you — the buyer — and will further describe your obligations.

For example, you might have to cover your agent’s fees, given the new real estate commission rules decoupling seller and buyer agent compensation. But in some cases, the seller might offer to cover this, so you won’t have to worry about the cost.

The defining factor of this agreement is that, once signed, you cannot work with another agent during the specified time period. Here’s a sample of an exclusive right-to-represent agreement.

Non-exclusive not-for-compensation contracts can be broken at any time by either the buyer or the agent. This type of contract will allow you to work with multiple agents.

This affords you the fiduciary privileges of agent representation when viewing houses with that particular agent, but you’re not beholden to them exclusively. The agent who helps you find and buy a property is the one who gets the commission.

Non-exclusive right-to-represent contracts state that the buyer will compensate the broker — if commissions are not fully covered by the seller — if the buyer purchases a house their agent presents to them. Under this contract, though, the buyer can purchase a home with another broker as long as their original agent didn’t propose that particular property.

The components of a buyer-broker agreement

A buyer-broker agreement consists of several important parts:

Duties

This section of the agreement outlines the responsibilities of your real estate agent. Some of the tasks your agent will do for you include the following:

Show you properties that meet your needs

A buyer’s agent is going to sit down with you to help you figure out how much house you can afford and what requirements the house should meet. They will sift through property listings in your desired area and schedule appointments to show you homes that best fit your criteria. They’ll give you a general rundown of the neighborhoods where you’re shopping for homes and will answer any questions you may have along the way.

Explain documents, procedures, and disclosures

A buyer’s agent will gather appropriate documents and review them with you. They’ll recommend the proper inspections for your house, and they’ll even arrange to have those inspections done.

Help you write and submit your offer

Once you find the house that you’d like to make an offer on, the buyer’s agent will offer you advice about what they think is a reasonable offer for the home. Then they’ll write it up and present it to the listing agent to give to the seller. If the seller rejects the offer, the buyer’s agent will consult you and negotiate on your behalf.

Monitor contingency time limits

There are many steps to buying a house, and each will take a certain number of days to complete. The buyer’s agent will help ensure that things like the home appraisal, the inspection, and mortgage approval are completed on time.

Be your support on closing day

A buyer’s agent is going to work hard to make sure that you get the house you’re interested in buying. When the closing day finally comes, they’ll offer support and guide you through all of the paperwork (there’s going to be a lot!) and ensure that the transaction goes off without a hitch.

Term length

The length of your buyer-broker agreement is one of the first things laid out in the contract. During this time, you are contractually obligated to honor the agreement for that time frame.

Typically, the agreement will last for six months. However, some agents will request a full one-year agreement, while others will agree on a 30-day agreement. This is generally a negotiable term, so just talk it over with your agent if you have concerns about the proposed length of your buyer-broker agreement.

Termination

It is usually possible to terminate the buyer-broker agreement if the buyer or the agent feels the arrangement isn’t working out. This section of the contract will outline how to terminate the deal, the required notice period, and the fees the buyer has to pay if the advance notice is not given.

Buyers should beware, however, that because buyer-broker agreements are between you and the brokerage — not just one specific agent — your request to terminate may be countered with an offer to simply assign you to a different agent within the same brokerage.

That said, brokers usually understand that when one party wants out, pressuring the other side to continue probably doesn’t do anyone any favors.

“I don’t like to hold anybody to contracts,” says Adam Slivka, an Irwin, Pennsylvania-based agent with almost two decades of experience. “If someone wants out, I probably don’t want to work with them, either — you know what I mean?”

As long as you don’t try to weasel out of your agreement as soon as your purchase offer has been accepted, there’s likely room to talk things through and part ways amicably.

“It just depends on the circumstance and the broker,” says Slivka.

Compensation

Two types of compensation could be listed in this section of the agreement: Retainer fee and payment.

Retainer fees are included in the agreement to compensate agents for their time and any expenses incurred while looking for a buyer’s dream home. Frequently, agents use retainer fees to differentiate serious buyers from uncommitted ones.

This section also outlines payment. Recent data shows that the average buyer commission rate is 2.55% of the home’s sale price. However, depending on negotiations, you might avoid this cost if the seller agrees to cover it as an incentive. The same applies to a for-sale-by-owner (FSBO) home—you’ll typically be responsible for paying your agent unless you negotiate a deal where the seller agrees to cover a reasonable fee.

“When you’re dealing with a for sale by owner house, that seller isn’t tied into any kind of relationship with the multiple listing service,” explains Dan Robins, a 23-year agent in West Chester, Pennsylvania.

“You need to clarify that upfront with your agent to make sure you’re on the same page — if it’s a $500,000 house, your closing costs might increase by $15,000 if there’s a 3% commission built into that buyer-broker contract.

“Buyers need to be aware of that before they sign.”

Representation

This section of the agreement outlines what kind of representation you have.

If you agree to designated representation, this means that your agent will show you homes listed by other agents from their real estate agency. If you agree to dual representation, you agree to see properties that your agent has listed with the sellers, and your agent will represent both you and the seller. Dual agency is not legal in some states due to the potential for conflict of interest.

Exclusivity

This section details exclusivity rights that the buyer agrees to.

If you’re in an exclusive agreement with an agent, this means you will work with them and only with them. You can negotiate the commission rate, but if the seller agrees to pay additional commission and it is disclosed, the buyer’s agent may receive more. However, that doesn’t mean your agent is going to slack on their duties — they still have your best interest at heart.

If you’re in a non-exclusive agreement, then you, the buyer, may work with other agents to purchase a property.

Property description

This paragraph clearly states what kind of property you are looking for and the price range. Because this paragraph specifies what type of property you want to buy, it may grant you the ability to use another agency to look for something else.

For example, if you are working with an agent to find a new summer home, and the property description states you want a single-family home in the $100,000 to $150,000 price range, then you can probably work with another agent to find an investment property — like a 10-unit complex in the $800,000 to $900,000 price range — but clarify this with your initial agent first.

Confidentiality is one reason to sign a contract; the other reason might be that the agent then knows you’re a little more serious. Hopefully they’ll put a little extra effort in to make things happen or to find a property for you as a client.

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  Adam Slivka Real Estate Agent

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  Adam Slivka Real Estate Agent at C21 Fairways

  • Years of Experience 19
  • Transactions 435
  • Average Price Point $221k
  • Single Family Homes 428

Which agreement is best for you?

The buyer-broker agreement that works best for your scenario will vary depending on where you live and which agent you’d like to help with your home search. Whichever type of agreement you go with, pay close attention to the compensation and termination sections of the contract before signing on the dotted line.

And talk to your agent if you have any questions. Remember, the buyer-broker agreement exists to protect you both. If you’re still searching for a good agent, use HomeLight’s Agent Matching tool to find top-performing candidates in your area.

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