The real estate landscape is evolving, and a big change this year is the mandatory use of the buyer broker agreement. Though this agreement has been around for years, a majority of agents didn’t use one—leading to potential confusion about agent-client relationships.
Buyers will now need to sign what’s called the Buyer Representation and Broker Compensation Agreement with their chosen buyer agent before viewing properties or making offers. This agreement, similar to a seller’s agreement with their listing agent, formalizes the relationship between the buyer and their agent.
Here are the key aspects of the agreement:
Representation period. The agreement is initially set for a period not exceeding three months, with the option to renew as needed.
No pre-existing agent relationship. Buyer agents invest significant effort in finding, screening, and showing properties that meet client criteria, evaluating disclosure packages, and crafting strategic offers. In return, buyers commit to working exclusively with their agent and acknowledge that they don’t have an existing agent relationship.
Compensation to broker. Sellers traditionally have covered both listing and buyer broker fees from sale proceeds, with compensation details available in the Multiple Listing Service (MLS). Fees are and have always been negotiable. However, the San Francisco MLS will no longer display buyer broker compensation offers starting on August 12th. Instead, offers must include a form specifying the buyer broker’s fee, which sellers can accept, reject, or negotiate. If a seller does not cover the fee, the buyer agrees to do so and the amount will be included in their closing costs.
Agents can’t get paid twice. The fee specified in your agreement is the maximum your buyer broker can accept.
Feel free to contact me with any questions you might have. With more than 22 years of experience in San Francisco real estate, I am a valuable resource for industry insights. You can reach me at 415.823.4656 or eileen@insidesfre.com.