Do I Need To Sign A Buyer-Broker Agreement When Buying a Home In DC?
Buying
Getting ready to buy and wondering what the protocol is around finding an agent these days? Effective mid-July 2024, the new NAR policy mandates that agents have a buyer agreement signed prior to working with that buyer in the first place. What does this type of agreement ensure? That agents no longer show homes without having an official agreement in place, that the agent-buyer working relationship is clearly spelled out, and what the agent fee entails — among additional considerations. And while in DC, we’ve been operating under these stipulations for years, we still feel it’s important to give you the full rundown on the latest development in NAR policy.
Whether you’re ready to buy or not sure where to start, keep reading to learn what signing a buyer-broker agreement means in DC today!
What Is A Buyer-Broker Agreement?
A Buyer-Broker Agreement is a contract between a homebuyer and a real estate agent that outlines the agent’s duties, compensation, and the buyer’s obligations.
Here’s a breakdown of key elements and considerations:
Establishing a Working Relationship
Signing a Buyer-Broker Agreement formalizes the partnership. It legally obligates the agent to represent your interests throughout the home-buying process by helping with negotiations, offering market insights, and guiding you through complex paperwork.
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Compensation Clarity
This agreement details how the agent will be compensated, which is often through the seller’s commission, meaning no out-of-pocket cost for the buyer. However, if the seller doesn’t offer a commission, this agreement could require the buyer to pay. In short? Reviewing this part of the contract helps you understand any financial commitments prior to signing on the dotted line.
Exclusivity
Most Buyer-Broker Agreements are exclusive, meaning you agree to work solely with that agent for a specified period. This can benefit both parties, as the agent is assured of their commission, while the buyer receives dedicated service. Non-exclusive agreements are also possible in some cases but are very rare.
Scope of Representation
The agreement also specifies the agent’s duties and responsibilities, such as finding appropriate properties, negotiating offers, and providing valued market advice. It also outlines the buyer’s responsibilities, from action items like clear communication to honoring scheduled showings.
Cancellation Terms
The agreement usually includes terms for cancellation by either party, which is essential if the relationship isn’t working out. This ensures you have the flexibility to terminate the contract under specific, outlined conditions.
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The New Policy
The new National Association of Realtors® (NAR) policy on buyer-broker agreements introduces changes for buyer-broker relationships in real estate transactions nationwide, even if not in the DC area. In particular, requires real estate agents representing buyers to have signed agreements with their clients before showing properties. This ensures that buyers clearly understand the services they’ll receive, along with the compensation terms, fostering transparency and reducing misunderstandings around agent roles and fees.
This year’s NAR® settlement was big news. Read more about how the settlement impacts homebuyers and sellers here.
Additionally, the new policy prohibits the display of offers of compensation for buyer brokers directly on Multiple Listing Service (MLS) listings, a change aimed at giving consumers more autonomy over commission negotiations. Compensation can still be offered, but it must be arranged outside the MLS — either through direct negotiation or via other seller-offered concessions like closing cost support. This policy shift is part of a broader effort by NAR to adapt to recent legal actions focused on transparency and consumer choice in real estate practices.
These updates underscore a shift towards more direct, negotiated compensation structures, emphasizing clarity in buyer-agent relationships and cost transparency.
Thinking about making real estate moves in DC? We’d be happy to help! Give us a call at 202.280.2060 or email us directly at jsmira@jennsmira.com.
