NAR Clarifies When A Buyer Contract is Required

As the July deadline approaches for implementing changes in the National Association of Realtors (NAR) commission lawsuit settlement agreement, NAR is focusing on refining details about buyer-broker agreements. While requiring agents to have a written agreement with their clients to work with them as a buyer’s agent officially, these changes also bring clarity and transparency to the process, ensuring a smoother and more professional experience for all parties involved.

To help clarify these changes, NAR recently published an FAQ page related to the settlement agreement. This FAQ explains that the term “working with” is used to distinguish between MLS participants who actively provide brokerage services to a buyer and those who simply market their services or engage in discussions with a buyer.

For example, services such as identifying potential properties, arranging property tours, negotiating on behalf of the buyer, and presenting offers by the buyer all require a written agreement between the agent and the client.

Conversely, according to the FAQ, if a broker provides access to a house they have listed to an unrepresented buyer, this is an example of not “working with” a buyer. Additionally, the FAQ outlines situations where an agent is not considered to be working with a buyer, such as when they are solely acting as an agent or subagent of the seller or if they are performing ministerial acts without expecting payment.

However, a written buyer-broker agreement is necessary in cases where an agent represents both the buyer and the seller in a transaction (known as a dual agency).

The FAQ also mentions that a written agreement between an agent and a buyer is required before taking the buyer on any home tours unless state law specifies otherwise.

 

Click to view NAR Settlement FAQs