A Primer on Written Agreements with Buyers
August 9, 2024 Member Benefits, MLS Updates
Whenever providing BUYER services and prior to touring a home, a written agreement with the buyer is mandatory. Touring means that as an Agent providing buyer services, you are either touring the home with them or have facilitated the home tour. The Tour is defined as being conducted virtually or in person.
Here is the new CCIMLS and MVMLS rule as of August 12th:
A Participant working with a buyer must enter into a written agreement with the buyer prior to the buyer (or Participant on the buyer’s behalf) touring any listing, or if no tour is conducted, then when the Participant prepares an offer on behalf of the buyer. This requirement does not apply to potential buyers attending an open house that is open to the public (whether hosted by the listing broker or another firm) or a showing by the listing broker of property listed by that listing broker when not providing buyer services.
Under MLS rules, any buyer agreement must have the following elements:
Compensation must specify and conspicuously disclose the amount or rate of compensation the broker will receive and how this amount will be determined
The compensation must be objectively ascertainable and may not be open-ended (e.g., language such as “buyer broker compensation shall be whatever amount the seller is offering to the buyer” is considered open-ended)
Broker may not receive compensation for buyer brokerage services from any source that exceeds the amount or rate agreed to in the agreement; this excludes any payment the broker may receive for listing services in the transaction
Buyer must be. notified in the agreement that broker commissions are not set by law and are fully negotiable
FAQs
Yes. Massachusetts Consumer Agency Disclosure is state law and is still required. The disclosure may occur sooner than when a written agreement is needed as it is the first personal meeting with the buyer. The MLS requirement of a written agreement is not required until a property is toured when providing buyer services. However, at no time should the Massachusetts Consumer Agency Disclosure be executed after the written agreement with the buyer.
No. The written agreement does not have to be a buyer agency agreement, and the MLS does not require specific agency relationships.
No. Both organizations have produced buyer agreements that provide brokers with options for conducting their business. Additionally, brokers may produce their own forms in consultation with legal counsel provided that they meet all the criteria required in MLS rules
No. When showing a house to either a buyer with their buyer agent (if the agent accompanying the buyer or has facilitated the home tour) or you are showing the home to an unrepresented buyer, then no written agreement is required.
No. Whether it is the listing agent or another agent hosting the open house, you are not providing buyer services. You may be hosting the open house to attract buyers who become your clients, and until you start providing buyer services, you do not need a written agreement.
No. Buyer agreements are between you and your buyer client, just as listing agreements are between the listing broker and seller client. You do not have to share them with the cooperating broker. The settlement attorney may need to confirm compensation to draft the Purchase and Sales contract or for settlement of the transaction.
DISCLAIMER: YOUR BROKER SHOULD HAVE A POLICY DICTATING WHICH AGREEMENT OR TYPE OF AGREEMENT YOU SHOULD USE. PLEASE DISCUSS THIS WITH YOUR BROKER. CCIMLS, MVMLS, or CCIAOR DOES NOT REQUIRE THE USE OF ANY SPECIFIC AGREEMENT.
Here is a quick rundown of what this means and the differences in written agreements for buyers.
Most written agreements with buyers can be put into three buckets: Exclusive Buyer Agency Agreements, Non-Exclusive Buyer Agency Agreements, and Touring Agreements
Exclusive Buyer Agency Agreements
An Exclusive Buyer Agency Agreement gives the buyer broker the exclusive right to represent the buyer in their home search on the provisions outlined in the agreement. This means the buyers commit to working solely with you and not with any other agents during the agreement’s term - and per the provisions placed in the agreement.
The Massachusetts Association of REALTORS® form is an Exclusive Buyer Agency Agreement. It provides exclusive representation based on both the term and anything added in the ‘Additional Provisions of Term’ section.
The term of the agreement could be a short period of time, such as one day, or as long as you and the buyer want the relationship (i.e. six months, one year, or even two years). The ‘Additional Provisions of Term’ could lay out other constraints of the exclusive relationship, such as a geographic area (a neighborhood, a village, a town, a county, etc.), a specific property (or properties), or any other provisions to narrow down the exclusive relationship.
The buyer agrees to compensate the buyer broker for any property bought during the term that falls within the agreement's provisions. Please consult your broker with any questions about how to use this agreement.
Non-Exclusive Buyer Agreements
A Non-Exclusive Buyer Agency Agreement provides the written agreement with buyers to show the property but without the exclusive relationship. It still defines the term, any provisions, the buyer’s role, and the broker’s responsibilities but does not commit the buyer to using that buyer broker exclusively.
The Cape Cod & Islands Association of REALTORS® buyer agreement is a non-exclusive buyer agency agreement. This allows buyers to work with more than one buyer broker. However, the form lists the broker's role and binds the buyer to pay the buyer broker if the broker completes one of the three outlined broker responsibilities in the form.
Under the CCIAOR Non-Exclusive Buyer Agency Agreement, the buyer agrees to pay the buyer brokerage if the buyer brokerage performs ONE of the following broker roles and the buyer procures the property:
(b) tour and prepare detailed analysis of specific Properties, per Buyer’s request;
(c) help Buyer prepare, negotiate, and secure a contract to purchase one or more Properties;
(d) cooperate with the seller’s real estate licensee(s) to facilitate and complete the Buyer’s purchase of the Property.
Please consult your broker with any questions about how to use this agreement.
Touring Agreements
A Touring agreement is a written agreement that satisfies the MLS’ requirement for a written agreement to tour a property while providing buyer services but does not bind the buyer to pay the buyer brokerage for that tour or any other broker actions. It provides an opportunity to meet with a consumer in person, show them a property, and potentially convert them into a longer-term buyer client by having them sign a buyer agreement that includes compensation.
Neither CCIAOR nor MAR elected to produce a Touring Agreement. A brokerage, in consultation with its legal counsel, can draft one for its agents to use.
Zillow has produced a Massachusetts Touring Agreement for the industry. They have made it available to the industry. This approach lets a buyer broker and the buyer enter the first showing with a signed limited services agreement that satisfies the requirements outlined in MLS rules.
Zillow’s agreement is valid for 7 days to facilitate initial home showings and allow the buyer broker to convert the consumer into a longer-term client. During or after this period, a different representation agreement, which includes compensation details, can be signed. Please note that in Zillow’s Touring Agreement, a buyer broker is initially considered a facilitator for the buyer. You can read more about Zillow’s Touring Agreement HERE.
Please consult your broker with any questions about using Touring Agreements. This is not a recommendation of Zillow’s Touring Agreement but is used as an example of such an agreement.
The information contained on this page is not considered legal advice. You should consult your broker and brokerage attorney or contact MAR’s Legal Hotline at 1-800-5342 for additional information and clarification.
