Understanding Buyer Broker Agreements: What You Need to Know

If you’re in the market to buy a home, you may have heard about the new laws regarding buyer broker agreements and wondered what that means for you. Many buyers are hesitant to sign these agreements because they’re worried they’ll be stuck with a bad agent or forced to pay fees. But don’t worry—this is not as big of a deal as it sounds, and you’re not locked into anything you’re uncomfortable with.

Here’s a simple breakdown to help you understand these agreements and why they matter.

What is a Buyer Broker Agreement?

A Buyer Broker Agreement is a contract between you (the buyer) and the real estate agent representing you. It outlines the terms of the relationship, including how long the agent will represent you, what services they’ll provide, and whether they’re entitled to compensation if you buy a home.

Since the National Association of Realtors (NAR) introduced new rules, this agreement has become more common, and it’s important to understand what you’re agreeing to. One fundamental change is that signing this contract might require you to pay the broker if you buy any property—even if they weren’t directly involved in that specific purchase.

Why Are Buyers Hesitant?

Many buyers worry that if they sign this agreement and don’t like their agent, they’ll be stuck working with them or forced to pay fees, even if the agent didn’t help them close the deal. But here’s the good news: you can cancel the agreement if things aren’t working out. Agents are not all the same, and you shouldn’t feel obligated to stay with someone who isn’t the right fit for you.

It’s also important to note that when you click on a link on sites like Zillow or Redfin to schedule a home showing, you might be paired with a random agent. These agents might not always have the experience needed to navigate the complexities of the market. With the new laws, signing an agreement with an agent who isn’t a good fit can complicate things, so it’s crucial to do your research—just like you would when selling your house.

How Long Does the Agreement Last?

Most agreements last up to 90 days, but you can end the relationship earlier if you’re unhappy. If you sign an exclusive agreement, the broker is entitled to a commission whether they were directly involved in your purchase or not. If you sign a non-exclusive agreement, the broker is only entitled to compensation if they actively helped you buy the property.

Can You Cancel the Agreement?

Yes! If you accidentally sign with an agent who isn’t a good fit, you can cancel the agreement. In California, per the California Association of Realtors (CAR), if you sign a non-exclusive agreement, the cancellation takes effect immediately upon receipt of a written notice from you or the agent—or on a specified date if one is filled in. If you sign an exclusive agreement, it takes 30 days to cancel, but during this time, the agent is still entitled to compensation if they were involved in helping you find or purchase a home.

Key Points to Look For:

- Exclusive vs. Non-Exclusive: If you sign an exclusive agreement, the agent gets paid no matter what. In a non-exclusive agreement, they only get paid if they have direct involvement in your purchase.

- Broker Involvement: For non-exclusive agreements, the broker must prove they did something to help with your purchase, such as showing you the home, submitting an offer, or helping you analyze the property.

- Continuation Period: Even if you cancel the agreement, the broker might still be entitled to compensation if you buy a home they were involved with within a certain timeframe. They must provide a list of these properties within five days of cancellation for this to apply.

Do Your Research

Signing a Buyer Broker Agreement isn’t something to fear, but it’s essential to understand what you’re getting into. Take the time to research your agent, read reviews, and make sure they have the experience to guide you through the home-buying process. Keep in mind that each brokerage may have its own versions of the buyer broker agreement forms, so it’s important to carefully review the details and ask questions if anything is unclear. Some agreements might have different terms, especially around cancellation rights or continuation periods, so don’t hesitate to ask for clarification before signing.

If you find yourself in a situation where you’re unhappy, rest assured that you have options to move on.

In short, a Buyer Broker Agreement protects both you and your agent. As long as you’re informed and ensure you’ve chosen the right agent, the home-buying process should be smoother and more efficient.