Best Practices for Written Buyer Agreements

Best Practices for Written Buyer Agreements 

• Under the NAR settlement and NAR policy statement the San Diego MLS added rules requiring brokers to enter written agreements with buyers effective August 12, 2024. 
• The terms of such agreements are left up to each broker and buyer to negotiate. 
• SDMLS promotes transparency and fairness for all real estate consumers. 
• To help SDMLS further educate participants and subscribers about MLS’s new rule, we’re providing you with a Best Practices for Written Buyer Agreements resource. 
• SDMLS Subscribers, consult first with your employing responsible Broker Participant regarding custom written buyer agreements. 
• SDMLS Participants, always consult with competent legal counsel to advise you about specific written buyer agreements. 

Additional Resources 

• The National Association of REALTORS® offers useful tips on buyer agreements and other resources. 
• The Consumer Federation of America released a list of what it considers consumer-friendly terms "Proposed Criteria for Evaluating Home Buyer Contract Forms." 

San Diego MLS Rules and Regulations Document – PDF 

• 8.3 Buyer Broker Agreement 

All MLS Participants and R.E. Subscribers, working with a buyer, must enter into a written agreement with the buyer prior to touring a home. The written agreement must include:(1) a specific and conspicuous disclosure of the amount or rate of compensation the Participant will receive or how this amount will be determined, to the extent that the Participant will receive compensation from any source; (2) the amount of compensation in a manner that is objectively ascertainable and not open-ended; (3) a term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and (4) a conspicuous statement that broker fees and commissions are not set by law and are fully negotiable. 

• 8.4 Buyer Broker Agreement Written Documentation 

The service shall have the right to demand from an MLS Participant a copy of any written buyer broker agreement satisfying the requirements of Rule 8.3 whenever an MLS Participant or R.E. Subscriber working with the buyer tours a property listed in the MLS. If the Broker Participant or R.E. Subscriber fails to provide the agreement requested by the service within 1 day after the service’s request or if the agreement provided to the service does not include all the terms required in Rule 8.3, the service shall have the right to discipline the Participant or Subscriber for a violation of MLS Rules. 

• 8.5 Required Consumer Disclosures Regarding Compensation 

Participants and Subscribers must disclose to prospective sellers and buyers that broker compensation is not set by law and is fully negotiable. This must be included in conspicuous language as part of any listing agreement, buyer written agreement, and pre-closing disclosure documents (if any, and except those documents that are government-specified). Participants and Subscribers, in representing sellers, must also conspicuously disclose in writing to sellers, and obtain the seller’s authority for, any payments or offer of payment that the listing Participant or, seller will make to another broker, agent, or other representative (e.g. real estate attorney) acting for buyers. This disclosure must include the amount or rate of any such payment and be made in writing in advance of any payment or agreement to pay another broker acting for buyers. 

Please note: 

Neither the listing broker nor the seller has any obligation to compensate the buyer's broker in a transaction. If the buyer's broker wishes to know whether the listing broker will compensate the buyer's broker for being procuring cause of a sale, the buyer's broker may ask the listing broker. If the listing broker offers compensation to the buyer's broker, that is a contractual matter between the two of them. If the buyer wants the seller to pay the buyer's broker, the buyer will include appropriate language in the purchase offer. Nothing prevents a listing broker from asking for copies of a buyer broker agreement in advance of or during offer negotiations. However, there is no need for the listing broker or seller to see the buyer brokerage agreement, the listing broker can simply ask the buyer broker upon receiving the offer. The buyer's broker must either refuse to answer or answer honestly. However, per SDMLS Rules section 8.4, the MLS shall have the right to demand a copy of any written buyer broker agreement from an SDMLS Participant.