What is a Buyer Broker Agreement and When Do You Need To Sign One? 

Download When NOT to Sign a Buyer Broker Agreement. 

In the simplest of terms, the Buyer Broker Agreement (BBA), is a document that explains how the buyer agent will be compensated for assisting a buyer in the purchase of a home.  This document has existed for a long time but is now required to be implemented when a buyer works with a buyer agent because somebody sued the National Association of Realtors. 

Is it more complicated than that?  YES.  Should you sign one?  Depends.  Will you have to pay the buyer agent a commission?  Not likely but if you do it won’t be a surprise. 

Here are some FAQ’s:

• Is the BBA a contract between the buyer and the buyer agent for compensation to the buyer agent at the COE.   Either the seller pays it or the buyer pays it.
• Does a buyer have to sign a BBA to get listings from an agent? NO.
• Does a buyer have to sign a BBA to talk to an agent about buying a house? NO. However, entering the grey zone of agency is easy to do.  Remember, the agent has a fiduciary responsibility to the buyer and once the buyer starts talking about confidential information pertinent to the buyer, the buyer is entering an implied agency agreement. 
• Does a buyer agent get paid a commission if they successfully help a buyer close escrow without a BBA?  
• Is the buyer required to pay the buyer agent a commission at the COE? NO and MAYBE.  If the buyer chooses to buy a home the seller is not offering a buyer agent commission, then yes. 
• Can you cancel the BBA? YES.
• How long does a BBA last? Up to 90 Days.
• Is the BBA exclusive or non-exclusive? A buyer(s) can work with an agent non-exclusively if you can get the agent to agree. 
• Does a buyer have to sign the BBA prior to entering a home? YES, if it’s listed in the MLS. 
• Does signing a BBA obligate the buyer to work with the agent that is showing the house.   However, if the buyer buys that house with another agent’s help, the showing agent will likely receive the commission.
• What is a Redfin showing agent? A Redfin showing agent shows homes to a buyer in the hope that they foster a relationship with the buyer. Beware of the document you sign to enter the home.  It could be an exclusive binding contract with the Redfin agent for 90 days.
• What are Zillow Touring Agreements?
  • A 7 day agreement for showing property.
  • There’s an implied clause that obligates you’ll pay the Zillow agent a commission or a fee if you move forward on a house within 7 days, whether you use the Zillow agent or not. Even if the seller pays it with another agent, the showing agent will get a commission. 

There are a lot of implications in the above FAQ’s.  Thus, I’m including an advice section below (coming soon) that helps to navigate the hidden issues with the short-term use of a BBA, Zillow touring agent or Redfin showing agent, as well as legal obligations buyers are agreeing to, they’re not aware of when signing any agreement prior to entering a home. This is where I make a case for interviewing agents for a long-term working relationship. 

But first, let’s back up to get some context for all this confusion the DOJ has imposed upon the buyer via the NAR settlement.

Previous problem #1.  In some parts of the country there ‘were’ multiple listing services (MLS) that required a buyer agent commission be entered into the MLS at the time of the entry of the listing.  The commission was negotiated by the listing agent at the time of the signing of the listing agreement.  Thus, the buyer agent had no part in the negotiation with the seller as to what their compensation could be.  The seller is relying on the listing agent to share the commission fairly (in most cases this came to fruition). 

Previous problem #2.  The commission to the buyer agent was distributed broker to broker rather than seller to buyer agent.  That means, the listing broker collected the commission and issued the commission the buyer agent’s broker and then the commission was issued to the buyer agent.  Although this was a successful system, it disabled the seller from negotiating with the buyer agent a commission for the accepted offer. 

The solution to the above issues is the ‘NAR Settlement’ and the above FAQ’s and the requirements stated in the BBA. 

As promised, here’s the advice on, The Hidden Issues When Signing a Buyer Broker Agreement, (Coming Soon).