Buying · September 3, 2024 · By Nadia Finch, Principal Broker
What a buyer agreement means (and doesn't)
Before we tour, you'll sign a short buyer agreement. It says what we're paid and that you can negotiate it. Often the seller covers it; now it's written down.
If you've looked at houses with an agent anywhere in the country in the past few weeks, you've probably been handed a document to sign before the first showing. A few people have asked us, reasonably, whether this is a new way for agents to get paid more. It isn't. But it is a real change, and it's worth understanding.
Why this is happening now
Earlier this year, a national real estate trade association settled a series of lawsuits about how agents are paid. As part of that settlement, new practice rules took effect on August 17, 2024. Two of them matter most to buyers:
- An agent working with a buyer must have a written agreement with that buyer before touring a home together, in person or by live video.
- Offers of compensation from sellers to buyers' agents can no longer be posted on the listing service that agents use to share listings.
New York already required agents to give you an agency disclosure form at first contact, explaining whom the agent works for. The buyer agreement goes one step further: it says, in writing and in advance, what the agent will be paid.
What's in ours
Our buyer agreement is two pages. We rewrote it this summer in language a person can read, and we sit down and read it with every buyer. It covers:
- Who we are to you
That one of our agents will represent you as your buyer's agent, owing you loyalty, confidentiality and honest advice.
- How long it lasts
A start and end date. Ours usually run three to six months and can be shorter. You can ask to end it early; the agreement explains how.
- What we're paid
A specific amount: a percentage of the purchase price, a flat fee, or occasionally an hourly rate. Not "whatever the seller offers." The agreement says plainly that the fee is negotiable and not set by law.
- Where the money comes from
It might come from the seller, from you, or from a combination. We can't be paid more than the amount in the agreement, no matter who offers what.
- Which area or properties it covers
A town, a county, a type of property, or just one house.
What hasn't changed
In most of the sales we've seen since August, the seller has still agreed to pay some or all of the buyer's agent's fee. That's now negotiated as part of the deal instead of being posted on the listing. Sometimes it's arranged between the agents up front; sometimes the buyer asks for a concession in the offer, which the seller can accept, refuse or counter. Your offer can include whatever request makes sense for you, and we'll talk it through before we write it.
Also unchanged: in New York, attorneys draft the contract of sale, each side has its own lawyer, and nothing is binding until the contract is signed. The buyer agreement doesn't change any of that.
"Do I have to sign a long agreement just to see one house?"
No. If you'd like to see one house, or spend one Saturday looking, we use a one-page touring agreement for a single property or a single day. It still states what we'd be paid if you bought that house with us, because the rules require it. If you decide you'd like to keep working together, we'll move to a full agreement then.
Open houses are different: you can walk into a public open house without signing anything with the listing agent.
What to ask any agent
- What is your fee, and is it a percentage or a flat amount?
- What happens if the seller offers to pay more, or less, than that?
- How long is the agreement, and how can I end it?
- Does it cover every town, or just the ones I'm looking in?
- Will you work with me on a touring agreement first?
Any agent should be able to answer those in a few minutes without getting uncomfortable. If they can't, keep looking.
My honest view
I've been doing this since 2006, and I think writing it down is better for everyone. Buyers always deserved to know what their agent would be paid and to negotiate it. Now they do, at the start, on paper. The conversation is a little awkward the first time. By the second showing, nobody remembers it.
If you have questions, call me at the Beacon office, (845) 555-0127, or read the buying section of our FAQ. And for anything about your specific situation, ask your attorney; we're agents, not lawyers.
This post is general information about real estate practice in New York as of September 2024. It isn't legal advice.