Learn what a buyer-broker agreement is, why you must sign one before house hunting, and what it means for your home-buying process.
Here’s What the NAR Settlement Means for You
Are you planning to buy a home soon? Then you’ll want to hear this: New buyer-broker agreements are now a requirement for homebuyers. Today, I’ll explain what these agreements mean for you and what you’ll be legally required to sign before you even start viewing homes.
What is a buyer-broker agreement? A buyer-broker agreement is a contract that homebuyers must sign with their real estate agent, agreeing to pay the agent a commission. Recent changes due to a settlement involving the National Association of Realtors (NAR) in Missouri have made this agreement mandatory. As of August 17, if you want to see homes, your agent must have you sign this agreement. If they don’t, they’re breaking the new rule.
Key requirements for homebuyers. You must sign a buyer-broker agreement before an agent shows you any homes. This document outlines the commission you’ll pay your agent when you buy a home. Open houses are an exception—you don’t need to sign anything because they are open to the public. However, if you’re working with an agent to view other homes, you must sign an agreement specifying the commission you’ll pay, usually a percentage of the sale price.
How commissions are handled. The buyer’s agent negotiates their commission with the listing agent (the seller’s agent). The amount the seller’s agent offers is no longer disclosed in the MLS, so the buyer’s agent must negotiate their share. You’ll know upfront what you’ve agreed to pay.
What buyers need to know. As a buyer, you must sign an agreement stating that you will pay your agent a set percentage if you buy a home within a certain period. This is especially important if a home offers 0% commission, meaning the buyer’s agent wouldn’t get paid otherwise.
Preparing for changes and potential issues. This is a new system with challenges and changes ahead. Different agents and brokers may handle it differently, but the main point is clear: if you’re looking at homes and haven’t signed a buyer-broker agreement, you could be breaking the rule.
Why compliance is essential. Non-compliance can result in fines of up to $200 per showing without a signed agreement. Knowing these new rules is critical to avoid legal issues.
Keeping up in this new real estate business without a buyer-broker agreement is like buying a house without checking if the roof leaks—you’re setting yourself up for a costly surprise. Ensure your paperwork is in order, know what you’re signing, and understand the new rules. Otherwise, you might end up paying more than just a commission—you could be footing the bill for hefty fines. If you have questions about this new requirement or want to know more about how it affects your home-buying journey, call me at (904) 574-1958.
