Signing any kind of contract isn’t usually something most people look forward to doing. There’s often the concern over it being an ironclad commitment, and reading it over without legal expertise can be worrisome. Now, within the residential real estate realm following the Burnett trial fallout, buyer-agent contracts are not only advisable, but mandatory.
What that means is that it’s crucial for you as an agent to not only understand all the ramifications and details, but also be able to easily explain it all to clients, ensuring transparency, clarity and trust. Developing strategies for overcoming client hesitations is essential, such as outlining your value proposition and using contracts as tools to enhance service quality. The increased reliance on technology and a shift toward advisory roles for agents are also likely.
Three of the most common types of buyer-agent contracts in today’s new normal include:
- Exclusive right-to-represent contracts. This is the most common buyer-broker agreement. It outlines the obligations of the broker, the broker-agent relationship and the responsibilities of the buyer. The buyer may not retain more than one broker. The contract sets the commission amount to be paid, which is owed even if the buyer finds the house or another broker does. If another party pays the commission, then the buyer doesn’t have to. Compared with non-exclusive contracts, usually for one or two months, exclusive ones might range from several months to a year.
- Non-exclusive not-for-compensation contracts. This agreement describes the broker’s duties and obligations to the homebuyer, generally to be performed by the broker’s agent. It outlines the relationship between the agent and the broker as well as the buyer’s responsibilities, specifying there is no compensation to be paid to the broker. Buyers can retain more than one brokerage and either party can cancel the contract at any time.
- Non-exclusive right-to-represent contracts. This agreement defines the broker’s responsibilities to the buyer, the relationship between the broker and the agent in addition to the buyer’s obligations. It provides for compensation to be paid to the broker if the broker shows the house the client buys, or otherwise represents the buyer. Another party may instead pay the commission to the agent. The buyer is usually able to buy a home through another broker as long as that home was not shown by the previous broker.
“We are in a new era of contracts that presents challenges but also opportunities,” said Riezl Baker, a REALTOR® and founding principal of Luxury Lake Oconee Real Estate Group in Greensboro, Georgia. “I am a firm believer that you have to educate yourself first before you educate others, so when you are presenting contracts to clients, you have to present it with confidence—and you have to present it professionally. And the only way you can do that is by knowing the details of the contract inside and out. That way you can overcome any objections or misconceptions.”
A panelist at RISMedia’s 2025 Real Estate’s Rocking in the New Year virtual event, Baker continued with thoughts related to the importance of making sure an agent’s value proposition is thoroughly understood during a session titled, “The Contract Conversation: What’s Working and What’s Not?”
“When I meet with a client, I explain why we are formalizing our relationship. It’s basically me saying that I will give you the highest level of service…the time, the resources and energy, and you will work with me exclusively. You present a contract to a client as a tool that is going to benefit them, that will enhance the quality of service they will receive. Then it’s clearly a win-win. You need to tell them what you bring to the table. Your value proposition, your knowledge of the market, your expertise—and this is why you are formalizing your agreement.”
Simplifying the contract so clients are not overwhelmed is an important part of the process. Tanya Monestier, a University at Buffalo law professor who also describes herself as a consumer advocate, recently penned her own “sample” contract, despite having no experience in real estate transactions. She says her goal was simply to push the industry to create more consumer-friendly contracts.
“I wouldn’t say I’m hoping it will be put to use,” she said. “I’m hoping to start a conversation about how to craft more fair and balanced contracts that buyers can understand. This is intended to be an illustration of that.”
At three pages long and just over 1,000 words, Monestier’s agreement is neither the longest nor the shortest currently circulating through the industry. But she says it does something that “very few” contracts she personally reviewed could claim to do.
“In drafting a sample or model buyer representation contract, I have attempted, foremost, to make the contract understandable. Doing so means that a little bit of the precision is lost and that not every permutation of every conceivable scenario is covered. This was a deliberate decision,” she said.
All this new and intense focus on contracts is a result of the National Association of REALTORS®’ (NAR) Burnett class-action lawsuit settlement requiring real estate agents to enter into written agreements with buyers before showing them a property. The agreements must include:
- A clear disclosure of the commission rate or amount
- A statement that commissions are negotiable and not set by law
- A prohibition on receiving more compensation than agreed to in the agreement
- A disclosure that broker commissions are negotiable
The settlement also prohibits buyer’s broker commission offers on the Multiple Listing Service (MLS), at least those who agreed to the terms of the NAR settlement.
As the industry continues to adapt to using mandatory buyer-agent contracts, Jeffrey Decatur, a broker associate with RE/MAX Capital in Upstate New York, and another panelist at Real Estate’s Rocking in the New Year, doubled down on education being the crucial factor with clients.
“When I sit with a new buyer, I will go over every scenario that we have, every piece of paperwork that we have,” he said. “I will show them every contract and go over everything from beginning to end. I’ll go through the MLS and educate them on what the market is doing in terms of absorption rates, average days on market and list-price ratios.
“I want to educate them using information the general public doesn’t know. That helps to ensure trust, which then makes them more comfortable. By the time I’m done, commission isn’t even an issue because they know what I’m bringing to the table and are confident in my ability.”
Homebuyers may try to avoid contracts by trying to go it alone, thinking the internet will provide them all the information they need. Agents know that’s the wrong thing to do, and it’s up to them to convince buyers that they need representation, meaning signing a contract.
“Buyers may hesitate to sign a contract because they believe they can search for properties independently without having a broker or an agent involved,” explained Baker. “How to overcome that is by outlining your value proposition, that you are the market expert, that you know the history of the properties, that you can give them all the research and what’s going on in the market. You can leverage all that, including the tools you have, in order to get the best outcome and the best price for the property.
“It all goes back to educating buyers on what services you can provide, using that contract as a tool to benefit them,” added Baker, who sees the role of a REALTOR® shifting from just a sales agent to more of an advisor.
The new world of contracts is just another example that with real estate, just like so many other professions, the more things change, the more they stay the same. Sure, contracts now have to be signed in order for agents to show properties, but the same point continues to be hammered home—contract or no contract, agents will always be vital to the home-buying process.
“Change is very constant in real estate,” asserted Decatur. “When I first got in the business, there were still MLS books, and now we have apps on our phone for everything. What we have to keep in mind is that with that change, our clients are going to change. But what remains constant is that the consumer still needs us. We are educators. We are the guides to help you through one of the most difficult transactions of your life.
“We are the person helping you through one of the largest financial decisions you’re ever going to make,” added Decatur, pointing to a NAR study saying that 85% of buyers and/or sellers rely on a REALTOR® to get them through the process. “There’s been a lot of talk about doing away with REALTORS®, kind of like the travel agent kind of thing, but this is more of a relationship business. That will always be there, because no matter what, everybody has always had the option to buy a house from a For Sale by Owner or a builder directly. But history has shown the need for a REALTOR® is always there, and most buyers and sellers would recommend and use us over and over again.”
Kelly Sand, a REALTOR® with CENTURY 21 Morrison Realty – HomeVest Team in Bismarck, North Dakota, stressed at Real Estate’s Rocking in the New Year that buyers have been quick to catch onto the contracts equation as they search for new homes.
“I definitely do see them adapting,” she said. “When things first rolled out, when we first started the showing agreements, it was new to everyone. And I think now as consumers talk amongst themselves, they’re used to now having to do that. I’m really looking forward to the next two to three years and seeing how our industry evolves, in the area of public perception in particular.
“With the steps we’re taking to move forward, agents will have to be up to date on contract language, educated and informed. It’s going to be harder to do this career part-time. The consumer will be more educated. Our relationship with clients does kind of lean toward more like the relationship with your financial advisor. If you’re purchasing a half-a-million-dollar home, you want that advisor walking with you. Why would you buy a home without asking someone who knows more?”
