On August 17, 2024, new rules went into effect regarding compensation of real estate brokers/agents. Prior to August 17th and since the rules took effect, my office has fielded miscommunications and misunderstandings regarding what is and isn’t allowed concerning a broker/agent’s compensation. This article aims to set forth the basics about these new rules.

In the past, buyer brokers/agents were not required to have their client execute a buyer representation agreement. However, under the new rules, all buyer brokers/agents must have a buyer representation agreement signed with their buyers prior to any showings. Further, the new rules have minimum requirements for a buyer representation agreement. It is now required for all buyer representation agreements to include (at a minimum) the following: (1) provide that the commission is negotiable; (2) set forth the commission (percentage or specific amount) due from buyer to broker/agent at closing; and (3) be signed by all parties prior to any showings. Therefore, a buyer representation agreement is now a pre-requisite in order for any type of agency relationship in any real estate transaction. If a buyer representation agreement is not executed prior to a buyer’s initial showing, the broker/agent can be fined $2500.