Buyers Beware the Buyer Brokerage Realtor Agreement

The Florida Realtors has posted on its website its Exclusive Buyer Brokerage Agreement as the contract form for Florida Realtors to ask/encourage/require prospective buyers to sign before showing them a house for sale. Prospective buyers would think that’s great. I’d like a real estate agent who only represents buyers on my side, rather than someone on the seller’s side. But that’s not what “exclusive” means in this case.

I teach law students to read the entire contract before drawing conclusions from the title. So, let’s read this Exclusive Buyer Brokerage Agreement. Go ahead and download it here. I read it. It doesn’t say that the Realtor represents only buyers. And it also doesn’t say that the Realtor will represent only the prospective buyer who signs the buyer broker agreement. In fact, paragraph 4(b) says, “Consumer understands that Broker may work with other prospective consumers who want to acquire the same property as Consumer.” That’s exactly the opposite of what the prospective buyer wants.

Then why does the title say “exclusive”? Here’s why: paragraph 5(a) says the buyer must conduct “all negotiations and efforts to locate suitable property only through Broker”. What this means is that the person who signs the Florida Realtors Exclusive Buyer Brokerage Agreement is legally bound to use only that Realtor to show them houses for sale. That prospective buyer cannot use zillow.com or realtor.com or redfin.com or trulia.com or the newspaper to find and visit homes for sale, unless they plan to pay the Realtor a commission if they end up signing a purchase contract. That’s right. The prospective buyer would still owe the Realtor a commission if a contract for purchase is signed. Where does it say that? Paragraph 7 says, “Broker’s commission is earned when…Consumer…contracts to acquire real property.”

Well, so far, reading the Florida Realtor’s Exclusive Buyer Brokerage Agreement tells us that the prospective buyer must use only the named Realtor to show them houses and that the buyer is obligated to pay the Realtor a commission if the buyer signs a purchase contract that the seller accepts. Does it get any worse than this for the buyer? Yes. According to this contract form, the Realtor’s commission is earned when the contract for purchase is signed. This means that the buyer must pay that commission even if there is no closing. So, if the purchase contract falls through for some reason, even if not the buyer’s fault, the buyer could still owe the Realtor the commission.

For those interested in fairness to buyers, the Florida Realtors did not post on its website any buyer broker contract form that was not “exclusive”. This means that it is up to each person who wants to buy a house and not be tied to the onerous restrictions of the Florida Realtors Exclusive Buyer Brokerage Agreement form to negotiate their own buyer broker agreement with the Realtor. This is because the National Association of Realtors requires all Realtors who represent a buyer to have a written agreement with the buyer. It does not need to be exclusive, but the only form provided by the Florida Realtors is the exclusive form.

You may have read the Tampa Bay Times newspaper article on August 14, 2024 entitled “Buying a Home in Florida Just Got More Complicated Thanks to New Rules” about the big change in residential real estate brought about by the 2024 settlement of the antitrust case against the National Association of Realtors. This is one of those changes. 

Are you confused? You’re not alone. I’m a board certified real estate lawyer, and this is one of the most far-reaching changes in my fifty years of practice. Generally, only the seller paid commissions to Realtors. The Realtors on each side shared the commission paid by the seller. After August 17, 2024, the buyer may be legally liable to pay commission to the Realtor on the buyer side of the deal. Now it’s all a matter of contract negotiation. Not just negotiating a contract for purchase with the seller. Now the prospective buyer must negotiate a contract with the buyer broker. That’s not a bad thing. It’s actually good for buyers to engage a real estate agent. Just see my page Buying a Home on this website.

But Buyers Beware: Read the entire buyer broker agreement, and call your lawyer before signing.