What is a Written Buyer Agreement and Why Do I Need to Sign it?

Real estate transactions come with myriad paperwork. A newer and required document is the written buyer agreement.

In effect since August 17, 2024 as part of the $418 million National Association of Realtors settlement, the agreement outlines the services of the real estate professional you work with.

But when do you sign it? Can you negotiate the terms? And are you able to get out of it after signing?

What is a written buyer agreement?

If you’re in the market to buy a home and choose to work with a real estate professional, you’ll be asked to sign a written buyer agreement (WBA).

The document details what services the real estate pro will provide and how much you’ll pay them. While a standard for years in some states, WBAs became a national requirement beginning on August 17, 2024 as a stipulation in the $418 million National Association of Realtors (NAR) settlement case.

The total or rate of compensation must be specific and not open-ended. Commissions are not set by law and can be fully negotiated.

The real estate professionals or multiple listing service (MLS) participants can include Realtors, real estate agents, appraisers, and mortgage brokers.

These agreements establish the buyer-agent relationship, where your best interests will be represented. WBAs can also be exclusive or non-exclusive — where you’re not locked into any time commitment or exclusivity with a single agent.

When do I sign a buyer agreement?

You enter into a buyer agreement before touring a property — in-person or virtually — with an MLS professional.

Independently going to an open house or asking a real estate professional questions don’t trigger the need for a WBA.

How does a written buyer agreement benefit the home buyer?

A WBA provides a clear and transparent outline of the services and costs you’ll render working with your professional. This needs to be written in easily understandable language.

These agreements help set expectations, cut down potential confusion, and remove any elements of surprise. WBAs also protect against conflicts of interest.

Are written buyer agreements negotiable, changeable and cancelable?

Just like most things in real estate and mortgage, buyer agreements are negotiable. On its site, NAR states that, “you should feel empowered to negotiate any aspect of the agreement with your real estate professional.” This includes services, length terms, and compensation — especially because compensation isn’t set by law.

NAR also advises that compensation must be stated clearly, either with a total amount, hourly rate, or percentage of the transaction. You can also negotiate with the seller or seller’s agent to cover your professional’s costs.

Changing a WBA is easily done, requiring mutual approval between you and your professional. Like other contracts though, make sure any agreed upon alterations are in writing, dated, and re-signed.

Early termination is case-specific, determined by the conditions of your buyer agreement. These exit terms can be with or without cause, and can also be negotiated with your agent.

Make sure to always read, clarify, and verify everything in your WBA.

Bottom line

A written buyer agreement is an important and required document that lays out the services and costs of working with a real estate professional.

Understanding what it is can help you feel more confident during your house hunt.

If you’d like to know more about the workings of written buyer agreements, check out NAR’s guide or speak with a local lender today.