Understanding the New Requirement: Written Buyer Agreements for Homebuyers
What Homebuyers Need to Know About the Written Buyer Agreement
At Magenta, we aim to keep our clients informed about important changes in the real estate industry. The National Association of REALTORS® (NAR) has issued a new guideline requiring homebuyers to sign a written buyer agreement as of August 17, 2024. This agreement outlines the services and compensation for working with a REALTOR®, offering clarity and ensuring a professional commitment from both sides. Below is the full consumer guide from NAR, which provides detailed answers to common questions about this new requirement.
CONSUMER GUIDE:
WHY AM I BEING ASKED TO SIGN A WRITTEN BUYER AGREEMENT?
If you’re a homebuyer working with an agent who is a REALTOR®, it means you are working with a
professional ethically obligated to work in your best interest. As of August 17, 2024, you will be
asked to sign a written buyer agreement after you’ve chosen the professional you want to work
with. Here’s what you should know about these agreements:
What is a “written buyer agreement?” What does it do?
A written buyer agreement is an agreement between you and your real estate professional outlining the services your real estate professional will provide you, and what they will be paid for those services.
Why am I being asked to sign an agreement?
Written buyer agreements became a nationwide requirement for many real estate professionals as a part of the National Association of REALTORS®’ proposed settlement of litigation related to broker commissions. The requirement went into effect on August 17, 2024.
Are these agreements new?
In some places, yes. Many states have required them for years, while some have not. As a result, it is entirely possible you or others you know have not used them in the recent past. Regardless, they are now a nationwide requirement for many real estate professionals.
Are these agreements negotiable?
Yes! You should feel empowered to negotiate any aspect of the agreement with your real estate professional, such as the services you want to receive, the length of the agreement, and the compensation, if any. Compensation between you and your real estate professional is negotiable and not set by law. In the written agreement, the compensation must be clearly defined (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended or 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 clearly lay out what services you (as a homebuyer) expect your real estate professional to provide, and what your real estate professional will be paid. These agreements make things clear and reduce any potential confusion at the outset of your relationship with your real estate professional.
When do I need to sign an agreement?
You will be asked to enter into a written buyer agreement with your real estate professional before “touring” a home with them, either in-person or virtually. If you are simply visiting an open house on your own or asking a real estate professional about their services, you do not need to sign a written buyer agreement.
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 by your agreement, you can still request, negotiate for, and receive compensation for your real estate professional from the seller or their agent.
Do agreements dictate a specific type of relationship I need to have with my real estate professional?
No—you are allowed to enter into any type of business relationship with your real
estate professional allowed by state law where you live.
Can I change or exit an agreement?
Yes. You and your real estate professional can mutually agree to change your agreement. Agreements may have specific conditions under which they can be exited, so read the text of the agreement and speak with your real estate professional if you would like to change or exit your agreement. 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.
Concluding Statement
At Magenta, we’re dedicated to helping you navigate every step of the homebuying process with clarity and confidence. Understanding the new requirement for written buyer agreements ensures you’re well-prepared and empowered in your real estate journey. If you have questions about these agreements or would like further guidance, don’t hesitate to reach out to us at Magenta. We’re here to support you every step of the way!