Following up on the NAR Settlement: Buyers Representation Agreements
Coming out of the NAR settlement, the way buyers engage with real estate agents has shifted in a meaningful way. Agents are now required to have a signed buyer representation agreement in place before showing properties that aren’t their own listings. For many buyers, this is the first time they are being asked to formally define their relationship with a broker—and understandably, it raises questions.
This post is intended to clarify what these agreements actually do, why they exist, and how I approach structuring them in a way that is fair, transparent, and aligned with my clients.
Overview
At its core, a buyer representation agreement is simply a contract between you and your broker that defines how you work together. It formalizes three key elements: agency, compensation, and expectations.
First, it establishes agency, meaning your broker is legally obligated to represent your interests. Second, it defines how and when the broker is compensated. Third, it sets the scope of the relationship, including duration and responsibilities on both sides.
Without a formal agreement, buyers often assume they are being represented when, in reality, the relationship is undefined and can be misaligned. The agreement removes that ambiguity.
Why This Agreement Exists
In most real estate transactions, sellers are formally represented from the outset. Buyers historically have not been, at least not in a clearly defined contractual sense. That imbalance can create issues.
The listing agent is contractually obligated to the seller. At the same time, buyers may believe they are receiving guidance that is fully aligned with their interests, when in practice that guidance can be limited or conflicted. As a result, negotiation leverage often tilts toward the seller.
A buyer representation agreement corrects this by formally aligning your broker’s obligations and incentives with you.
What Most Buyers Get Wrong
The hesitation around these agreements is consistent. Most buyers express some version of two concerns: they don’t want to be locked into working with one agent, and they don’t want to sign anything until they feel more serious about buying.
Both concerns are reasonable. In practice, they tend to be based on incomplete assumptions.
Most well-structured agreements include flexible termination provisions, and many are designed so that compensation is only owed if a transaction actually closes. At the same time, higher-performing brokers tend to prioritize clients they are formally committed to. Without an agreement, you are effectively operating as a non-exclusive lead, which often means lower priority and less access.
That has real implications. The best opportunities—particularly off-market deals or properties that trade before full exposure—are rarely presented to uncommitted buyers. Avoiding the agreement can feel like preserving flexibility, but in practice it often limits access and reduces leverage.
For that reason, the focus shouldn’t be on avoiding a buyer representation agreement, but on structuring it correctly. The key areas to pay attention to are duration, compensation structure, and any fees tied to termination or unsuccessful transactions.
How I Structure My Buyer Representation Agreements (And Why It’s Built This Way)
My default agreements are intentionally flexible. If no term is specified, they operate month-to-month, with either party able to terminate on 24 hours’ written notice. That’s by design. If I’m providing value, there’s no need for you to feel locked in. If I’m not, you should be able to move on without friction. The agreement is meant to create alignment, not enforce commitment.
That same approach applies to risk. There are no termination penalties before you go under contract, and no default compensation owed if a transaction fails. Deals fall apart for reasons often outside your control—financing, inspections, title—and I don’t believe those risks should be shifted onto you. Compensation should be tied to a successful outcome.
The fee structure itself is transparent and adaptable. Depending on the situation, it can be a fixed percentage, a sliding scale, or hourly. Different deals require different levels of effort, and the structure reflects that. An on-market purchase is not the same as sourcing or negotiating an off-market opportunity.
In most cases, we pursue having the seller cover the fee, but we don’t rely on that assumption. If the seller contributes, it is credited directly against your obligation. If they pay more than the agreed amount, the excess goes to your closing costs or reduces your purchase price. That removes hidden margin and keeps incentives aligned. In summary, the basic agreement is as follows:
Month-to-month by default, with either party able to terminate on 24 hours’ written notice.
No termination penalties and no compensation owed if a transaction fails.
Flexible compensation structure, with options for fixed percentage, sliding scale, or hourly depending on the type of deal. I typically ask for 3% for on-market properties and 4.5% for off-market properties.
Seller payment is typically pursued, but not assumed; any seller-paid compensation is credited directly to you
Any excess compensation above the agreed fee is applied to your closing costs or purchase price, not retained as additional margin
Clear, upfront alignment on fees and expectations so there are no surprises mid-transaction
At a high level, the structure is straightforward. You’re not locked into a long-term commitment, you’re not exposed to unexpected fees, and compensation is clear and tied to the type of deal you’re pursuing. When those elements are in place, the relationship works the way it should—focused, accountable, and outcome-driven.
A buyer representation agreement should simplify the process, not complicate it. When it’s structured correctly, it improves execution. When it’s not, it creates friction at the worst possible time. The difference is almost always in how the incentives are aligned.
