10 Things You Need to Know About a Buyer Broker Agreement

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Gone are the days where a simple handshake could solidify a working agreement between a buyer and their real estate agent. Instead of a handshake, buyer’s agents are presenting homebuyers with a document called a “buyer broker agreement” — and you might not know what that is!

If this is your first time buying a house, the buyer-broker agreement is just another document in a long list of others that require your John Hancock. However, if you’ve purchased a home before the 1990s, you might be wondering why this document is necessary.

Before we go into detail about the buyer-broker agreement, let’s first clarify what a buyer’s agent does.

Two businessmen discussing a buyer broker agreement on a phone in front of them.
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What does a buyer’s agent do?

A buyer’s agent is a real estate professional who’s going to be your new best friend during this exciting and sometimes stressful endeavor. We spoke to Josh McKnight, a top-selling real estate agent in Pennsylvania, and he describes the role of the buyer’s agent:

“A buyer’s agent has a fiduciary responsibility to their client, the buyer, to make sure that they understand the language in the contract and make sure they’re buying a home that fits their needs. They make sure the buyer is choosing all the correct contingencies and that they’re not being taken advantage of. They also have a responsibility to make sure that the home is worth what the sellers are asking for, and will work with the buyers to make an offer.”

What is a buyer-broker agreement?

A buyer-broker agreement is a document that establishes a business agreement between the buyer (you) and your real estate agent’s supervisor (also known as the broker). A buyer-broker agreement is used to protect the buyer, as well as the real estate agent representing them. It outlines the scope of work the real estate agent will do for the buyer, while giving the buyer reassurance that the real estate agent has their best interest at heart, McKnight explains.

If something goes wrong and you aren’t happy with the real estate agent you initially started working with, you can also ask the broker to assign a new agent to work with you.

A man's hands signing a buyer broker agreement.
Source: (Cytonn Photography / Pexels)

The components of a buyer-broker agreement

A buyer-broker agreement consists of several important parts.


This section of the agreement outlines the responsibilities of your real estate agent. Some of the tasks your agent will do for you include:

Show you properties that meet your needs

A buyer’s agent is going to sit down with you to help you figure out how much house you can afford and what requirements the house should meet. They will sift through property listings in your desired area and schedule appointments to show you homes that best fit your criteria. They’ll give you a general rundown of the neighborhoods where you’re shopping for homes and will answer any questions you may have along the way.

Explain documents, procedures, and disclosures

A buyer’s agent will gather appropriate documents and review them with you. They’ll recommend the proper inspections for your house, and they’ll even arrange to have those inspections done.

Help you write and submit your offer

Once you find the house that you’d like to make an offer on, the buyer’s agent will offer you advice about what they think is a reasonable offer for the home. Then they’ll write it up and present it to the listing agent to give to the seller. If the seller rejects the offer, the buyer’s agent will consult you and negotiate on your behalf.

Monitor contingency time limits

There’s a lot of steps in buying a house, and each of those steps will have a certain number of days for them to be completed. The buyer’s agent will help make sure things like the home appraisal, the home inspection, and mortgage approval are completed on time.

Be your support on closing day

A buyer’s agent is going to work hard to make sure that you get the house you’re interested in buying. When closing day finally comes, they’ll offer support and guide you through all of the paperwork (there’s going to be a lot!) and ensure that the transaction goes off without a hitch.

Term length

The length of your buyer-broker agreement is one of the first things laid out in the contract. During this time, you are contractually obligated to honor the agreement for that time frame.

Typically, the agreement will last for six months. However, some agents will request a full one-year agreement, while others will agree on a 30-day agreement.

Looking through a window at a man who is looking at a laptop screen, reading a buyer broker agreement.
Source: (Miguelangel Miquelena / Unsplash)


It is possible to terminate the buyer-broker agreement if either the buyer or the agent feels that the arrangement isn’t working out. This section will outline how someone can terminate the agreement, how much prior notice needs to be given and a dollar amount the buyer will have to pay if the advance notice is not given.


Two types of compensation could be listed in this section: Retainer fee and payment.

Retainer fees are placed in the agreement to compensate Realtors for their time and any expenses that may have been incurred while looking for a buyer’s dream home. Frequently, agents will use retainer fees as a way to differentiate the serious buyers from the ones that aren’t committed.

Payment is outlined in this section, and a lot of buyers have questions about it. In 2019, the average commission rate was 5.702%, but it can be as low as 3%. Some real estate agencies will tack on an additional couple of hundred dollars, but don’t fret! You, the buyer, will not have to pay your real estate agent’s commission. Once the transaction has finalized, the seller will pay their agent (the listing agency) all commission costs. Then the listing agency will pay the buyer agency what they are owed.


This section outlines what kind of representation you have. If you agree to designated representation, this means that your agent will show you homes listed by other agents from their real estate agency. If you agree to dual representation, your buyer’s agent is now a dual agent. As a dual agent, you agree to see properties that your agent has listed, and your agent will represent both you and the seller.


This section details exclusivity rights that the buyer agrees to.

If you’re in an exclusive agreement with an agent, this means you will work with them and only them. You can negotiate the commission rate, but if the seller agrees to pay additional commission and it is disclosed, the buyer’s agent may receive more. However, that doesn’t mean your agent is going to slack on their duties — they still have your best interest at heart.

If you’re in a nonexclusive agreement, then you, the buyer, may work with other agents and purchase a property.

Property description

This paragraph clearly states what kind of property you are looking for and the price range. Because this paragraph specifies what type of property you want to buy, that grants you the ability to use another agency to look for something else.

For example, you are working with an agent to find a new summer home, and the property description states you want a single-family home in the $100,000 to $150,000 price range. You can work with another agent to find an investment property like a 10-unit complex in the $800,000 to $900,000 price range.

A woman sitting in a living room reading a buyer broker agreement on a laptop.
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Buyer-broker agreements, explained

The buyer-broker agreement is an important document that’s designed to protect both the buyer and the buyer’s agent. This agreement clearly outlines what the agent will do for you, the terms of the agreement, and how the agent will be compensated, which depends on what kind of buyer’s broker agreement you have.

Nonexclusive not-for-compensation contracts can be broken at any time by either the buyer or the agent. This type of contract will allow you to work with any other agent if you’d like, and there is no compensation paid to the broker.

Nonexclusive right-to-represent contracts state that the buyer will compensate the broker if the buyer purchases a house their agent presents to them. However, if the seller agrees to pay a commission to the buyer’s agency, they’re off the hook. Under this contract, the buyer can also purchase a home with another broker as long as their original agent didn’t propose it.

Exclusive right-to-represent contracts are the most common buyer-broker agreement. Just like the others, it will outline what the agent will do for you, the buyer, and It will describe the buyer’s obligations. They may have to pay the commission detailed in the agreement, but if the seller agrees to pay the commission, the buyer will not have to. The only thing that makes this agreement different than the others is that the buyer cannot work with another agent during that time. You can view a sample of an exclusive right-to-represent agreement here.

Which agreement is best for you?

The buyer-broker agreement that works best for your scenario will vary depending on where you live and which agent you’d like to help with your home search. Whichever type of agreement you go with, McKnight advises buyers to pay close attention to the compensation and termination sections of the contract before signing on the dotted line. And talk to your agent if you have any questions; Remember, the buyer-broker agreement exists to protect you both.

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