There’s been a real shift in how home buying works in Texas. As of August 17, 2024, real estate agents are required to have a signed Buyer Representation Agreement with a buyer before touring a home. It’s essential to read and understand any written agreement you enter into with a real estate professional.
Background on the Change:
This requirement comes out of a settlement reached by the National Association of REALTORS® (NAR), the largest real estate trade organization in the country, following antitrust lawsuits over how buyer-agent compensation was handled. As part of that settlement, NAR now requires agents using the Multiple Listing Service (MLS) to have a signed agreement with buyers before showing them a home in person or on a live virtual tour.
What You Should Know Before You Sign:
- You Have Options: In Texas, you can sign a Showing Services Agreement instead of a full Buyer Representation Agreement, which gives you time to evaluate an agent before committing to anything exclusive.
- Understand the Representation: Ask whether the agent will be representing your interests exclusively, and what that means in practice.
- Exclusivity: Most Buyer Representation Agreements are exclusive, meaning you’ll work with that one agent. Confirm this with whoever you’re signing with.
- Term Length: Ask how long the agreement lasts and whether the term is negotiable.
- Cancellation Terms: Know who can end the agreement and under what conditions.
- Compensation: Ask exactly what the agent needs to do to earn their compensation, and how much that is.
- Read Everything: Don’t sign anything you don’t fully understand.
If you’ve already signed a Buyer Representation Agreement with compensation terms, be careful about signing a second one with a different agent, since you could end up contractually obligated to more than one agent. These agreements don’t reduce the fiduciary duty an agent owes you, either. If you believe an agent has acted against your interests, you still have rights that need to be respected.
One thing worth knowing: using these written agreements isn’t something an agent can just handle on their own. It requires broker supervision — every agreement has to be reviewed by a Designated Broker and kept in that broker’s files for four years.
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A Few More Things Worth Knowing:
- The terms of these agreements are negotiable, including services provided and how compensation is structured. Make sure the final agreement matches what you actually discussed with your agent.
- The conversation about compensation should happen early, right after you discuss representation.
- Be cautious if you feel rushed to sign, or if an agreement is hard to understand or seems to favor the agent.
- In Texas, you are not required to sign anything just to view a home at an open house.
- Sellers can still offer buyer-agent compensation, but there are new limits on how that offer can be marketed.
What This Means for Buyers, Sellers, and Agents
As a buyer, you’ll be asked to sign a buyer broker agreement before touring homes (open houses are still fine without one), and you’ll want to pay closer attention to whether buyer-agent compensation is being offered on a property, since you may end up covering it yourself if it’s not.
As a seller, you can still offer cooperative compensation to a buyer’s agent, but you can no longer market that offer through the MLS listing, which means more friction if you want to use compensation as a competitive edge.
For agents, there’s simply more work involved — listing agents have a harder time showcasing competitive offers of compensation, and buyer agents have to do more research to properly advise their clients on what they’re being asked to pay and why.
These changes make it more important than ever to understand your rights as a buyer. Don’t hesitate to ask questions before you sign anything. If you’d like to read more about the changes, or you want to talk it through, reach out to me and I’ll walk you through it.
