When it comes to buying a home, you’ll need to sign a written buyer agreement with your agent before touring a home, either virtually or in person.

The goal of the buyer agreement is to ensure you understand the specific services and value your agent will provide and exactly how much those services will cost. Per the settlement agreement, all buyer agreements must include the following four items¹:

1. A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
2. Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
3. A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and,
4. A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

That’s a lot of “legalese.” Let’s take a look at what all of that means in layman’s terms:

1. The agreement must include your agent’s fees and how those are determined, i.e. % commission, flat fee, etc.
2. Compensation cannot be open-ended. For example, the agreement cannot be “Buyer fee will be what the Seller offers” or “2-3%.”
3. Your agent cannot accept more than the amount stated in the agreement. Your agent must also outline the services they will provide, which can include finding properties, negotiating on your behalf, writing offers, coordinating home tours, etc.
4. Your agent must inform you that their fees and services are open to negotiation. To homebuyers, an agent cannot advertise their services as ”free” unless they are in fact receiving no compensation.

And, finally, a few other key points:

• The agreement must be in writing (not verbal), but can be signed electronically.
• This agreement applies to both in-person and virtual home tours.
• It does not apply if you just want to pop by an open house!
• You DO NOT need an agreement just to speak to an agent at an open house or speaking to an agent about their services, only before those services are rendered.
• Agreements can be amended should there be a situation where you and your agent might wish to alter part of it.

Let’s take a closer look at how you can embrace this change and make an informed decision when signing an agreement with your agent.