In the wake of the National Association of Realtors (NAR) settlement finalized in August 2024, the real estate industry underwent one of its most significant transformations in decades. One of the cornerstone changes is the mandatory use of written Buyer Broker Agreements before a real estate agent can provide tour services or substantive guidance to prospective homebuyers. This requirement, effective in most MLS-participating markets across the United States, has sparked confusion, resistance, and curiosity among consumers.
This article explains why the Buyer Broker Agreement is now required, the legal and practical reasons behind it, how it protects both buyers and agents, and what it means for the future of real estate transactions.
The Historical Context: Why Change Was Needed
For decades, buyer’s agents were compensated through a cooperative compensation model. Sellers paid listing brokers, who then offered a portion of their commission (typically 2.5–3%) to buyer’s agents via the Multiple Listing Service (MLS). This system created the illusion that buyer representation was “free” to the consumer.
However, this model led to several problems:
- Lack of transparency: Buyers often didn’t know how their agent was paid or whether the agent had incentives to steer them toward higher-commission homes.
- Misaligned incentives: Some agents prioritized homes with higher offered compensation over the buyer’s best interests.
- Antitrust concerns: The practice of blanket commission offers was challenged in court, culminating in the Sitzer/Burnett and Moehrl lawsuits, which alleged price-fixing.
The NAR settlement addressed these issues by decoupling buyer agent compensation from the MLS and requiring written agreements to clarify the relationship between buyer and agent.
2. Legal Foundation: The NAR Settlement Mandate
As part of the $418 million NAR settlement approved in 2024, all MLS-participating brokerages must require a written buyer representation agreement before:
- Touring a home (in-person or virtual)
- Providing detailed property information beyond public data
- Submitting offers on behalf of the buyer
This applies to all buyer agents, whether they are Realtors® or not, if they access MLS data or work with MLS-listed properties.
Key Rule: No written agreement = No tour. No exceptions.
This is not a suggestion—it is a binding industry rule enforced by local MLS boards and state real estate commissions.
3. Core Purpose #1: Transparency in Compensation
The Old Way (Pre-2024)
- Buyer assumes representation is free.
- Agent is paid by the seller (indirectly).
- Buyer has no written obligation.
The New Way (Post-2024)
| Element | Requirement |
|---|---|
| Compensation Disclosure | Must be stated clearly in the agreement (e.g., flat fee, percentage, hourly rate). |
| Non-Circumvention Clause | Prevents buyers from bypassing the agent to avoid fees. |
| Negotiation Rights | Buyers can negotiate the fee or request seller concessions. |
This eliminates the “hidden paycheck” and empowers buyers to understand and negotiate what they’re paying for.
4. Core Purpose #2: Fiduciary Duty in Writing
A Buyer Broker Agreement is a fiduciary contract. It legally obligates the agent to:
- Put the buyer’s interests first (loyalty)
- Disclose all material facts
- Provide competent advice
- Maintain confidentiality
Without a signed agreement, no fiduciary duty exists. The agent may only owe “ministerial” duties (e.g., opening a lockbox), not full representation.
Example: If you’re verbally working with an agent and they show you a listing they represent (dual agency), you may not realize the conflict—unless it’s disclosed in a signed agreement.
5. Core Purpose #3: Consumer Protection Against Steering
The agreement includes mandatory disclosures about:
- Whether the broker receives compensation from third parties (e.g., sellers, lenders)
- Potential conflicts of interest
- The scope of services provided
This reduces steering—the practice of guiding buyers toward homes that pay higher commissions rather than those best suited to their needs.
NAR Rule: Buyer agents cannot accept compensation above what is agreed upon in the buyer broker agreement without written buyer consent.
6. Core Purpose #4: Professional Accountability
Real estate agents invest significant time, money, and expertise in representing buyers:
| Cost to Agent | Typical Amount |
|---|---|
| MLS & licensing fees | $1,000–$2,000/year |
| Marketing & admin | $500–$1,500/month |
| Gas, insurance, tech | $300–$800/month |
| Time per buyer (uncompensated) | 40–60 hours (if deal fails) |
Without a contract, agents risk working for months with no guarantee of payment. The Buyer Broker Agreement ensures:
- Agents are compensated for their expertise
- Frivolous “window shopping” is reduced
- Serious buyers are prioritized
7. What the Agreement Typically Includes
While forms vary by state and brokerage, a compliant Buyer Broker Agreement must include:
| Required Element | Purpose |
|---|---|
| Parties Involved | Identifies buyer and broker |
| Duration | e.g., 3 months, 6 months, or “until closing” |
| Scope of Services | What the agent will do (tours, negotiations, etc.) |
| Compensation Structure | Flat fee, %, hourly, or seller-paid |
| Termination Clause | How either party can end the agreement |
| Geographic Area | Usually a county or metro area |
| Exclusive vs. Non-Exclusive | Exclusive = one agent; non-exclusive = multiple |
Pro Tip: Always negotiate. Many agents offer flexible terms, such as short duration or reduced fees for high-budget buyers.
8. Common Myths & Misconceptions
| Myth | Reality |
|---|---|
| “I don’t need an agent—I’ll just use Zillow.” | Zillow doesn’t negotiate contracts, review disclosures, or protect you from liability. |
| “The agreement locks me in forever.” | Most are 3–6 months and cancellable with notice. |
| “I can just pay the seller’s agent.” | Dual agency creates conflicts; you lose independent advocacy. |
| “It’s more expensive now.” | Total costs may be lower due to negotiation and competition. |
9. Benefits for Buyers: Why It’s a Net Positive
| Benefit | Explanation |
|---|---|
| Better Negotiation | You control your agent’s pay—use it as leverage with sellers. |
| Higher Accountability | Agents work harder when contractually obligated. |
| Customized Service | Define exactly what you want (e.g., off-market deals, investment analysis). |
| Legal Recourse | If the agent breaches duty, you have a contract to enforce. |
10. The Future: A More Professional, Transparent Market
The Buyer Broker Agreement is not a burden—it’s a professional standard, like hiring a lawyer or accountant with a retainer.
As the market adjusts:
- Commission rates are compressing (now averaging 2.0–2.5% for buyer agents, down from 2.7%)
- New business models are emerging (flat-fee brokers, hourly consultants)
- Buyers are more empowered than ever to shop for the best agent and fee structure
Final Thoughts: Embrace the Change
The requirement for a Buyer Broker Agreement is not about control—it’s about clarity, fairness, and professionalism.
Yes, it adds a step. But that step ensures you’re not flying blind in the most expensive purchase of your life.
Action Step: Before contacting any agent, prepare a list of questions:
- What is your fee, and is it negotiable?
- How long is the agreement?
- What happens if I don’t buy?
- Can I cancel with 30 days’ notice?
The best agents will welcome these questions. The ones who don’t? Keep shopping. Let’s connect!
