The National Association of REALTORS^® (NAR) proposed settlement agreement requires MLS participants working with buyers to enter into written agreements with the buyers before touring a home. REALTORS^® may be asked many questions about the written agreement and what it means for the buyer. The following questions and answers address concerns buyers may have regarding the written buyer agreements.

Written buyer agreement  

What is a written buyer agreement? Are there different types of agreements?

A written buyer agreement is an agreement between the buyer and the firm that outlines the real estate brokerage services the firm will provide to the buyer as well as the associated costs of those services. 

MLS participants working with buyers must enter into a written agreement with the buyer before touring the property. The MLS participant has three ways to show a home to a buyer. 

The buyer may choose to become the firm’s client and sign a WB buyer agency agreement. The buyer may choose to become the firm’s customer and receive the Disclosure to Customers form. The buyer may not know whether they want to be a client or customer; in which case, the buyer may choose to enter into a pre-agency showing agreement with the firm.

Firms may use the WRA-PASA Pre-Agency Showing Agreement for this purpose.

Why do firms need a written agreement with the buyer before showing a home?

One of the terms of the NAR proposed settlement agreement requires MLS participants working with the buyer to have a written agreement with the buyer before touring a home. This requirement went into effect on August 17, 2024. 

What must the written buyer agreement include?

The written agreement must include

• A specific and conspicuous disclosure of the amount or rate of compensation the real estate firm will receive or how this amount will be determined. The compensation amount must be objectively ascertainable, for example, a specific percentage of purchase price, a flat dollar amount or an hourly rate. Compensation may not be open-ended, for example, “buyer firm compensation shall be whatever amount the seller is offering to the buyer.”
• A term that prohibits firms from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.
• A conspicuous statement that firm fees and commissions are not set by law and are fully negotiable.

Is a written buyer agreement needed for an open house?

No. An open house is not considered “touring a home,” so an agent hosting an open house will not need to have written agreements with the buyers attending the open house.

What is the benefit of written buyer agreements?

The written buyer agreement clearly establishes which brokerage services the firm will provide to the buyer and the cost of those services. The agreements provide transparency for the buyer and reduce potential confusion regarding which services the buyer can expect and how the firm is paid. 

Agency  

Does the requirement for the written agreement mean buyer agency is required?

No. Buyer agency is not required. A buyer still has a choice regarding which type of agency relationship they wish to have with a firm. Pre-agency, subagency and buyer agency are allowed in Wisconsin and will continue to exist. 

A firm may show a buyer a home under pre-agency by executing a Pre-agency Showing Agreement with the buyer. However, the firm may not negotiate for the buyer, such as drafting an offer, while in pre-agency. 

To be able to negotiate for a buyer, the buyer must either be the firm’s client under buyer agency or be the firm’s customer, and the firm is a subagent of the listing firm. 

Can the buyer or the firm terminate the written agreement?

The WRA’s Pre-agency Showing Agreement and Disclosure to Customers form do not include a time frame for the contract. As such, either party would be able to exit the agreement at any point, unless otherwise modified.

If the buyer and firm have executed a WB buyer agency agreement, either party has the power to revoke the buyer agency agreement at any time but does not have the right to do so. Per the contract, the party may deliver a termination notice in writing.

However, cancelling a buyer agency agreement may violate the other party’s right under the contract. In that event, the other party may demand compensation for the damage sustained as a result of the cancellation.

Agents should also be aware that they cannot shorten the term of the buyer agency agreement without consent of the supervising broker.

Compensation  

Does the buyer have to pay the firm out of pocket?

The firm and the buyer indicate the amount of compensation the buyer will owe the firm on the WB buyer agency agreement. While the buyer is responsible to pay the firm as outlined in the buyer agency agreement, the buyer can still request the firm’s compensation be paid by the seller or the listing firm.

For more information about the NAR proposed settlement agreement, visit the WRA’s antitrust resource webpage.