Buyer representation agreements

The buyer's service agreement

A buyer representation agreement establishes the buyer–broker relationship. It is separate from the buyer–seller purchase contract and from an agency disclosure notice. It identifies the parties, property and geographic scope, promised services, compensation, and duration. Representation brings duties of loyalty, confidentiality, disclosure, reasonable care, obedience to lawful instructions, and accounting. The buyer generally promises cooperation, accurate information, and compliance with compensation terms.

Exclusivity and payment

A nonexclusive agreement permits other brokerage relationships subject to its terms. An exclusive agreement commits the buyer to one brokerage within its scope. An exclusive right to represent commonly provides a fee when the buyer acquires covered property during the term, regardless of who found it. Exclusive agency commonly preserves an exception for the buyer's independent acquisition. Labels and provisions vary; read the actual agreement to decide whether compensation is earned.

Compensation can be a negotiated flat fee or percentage. Identify when it is earned, when it is payable, and how seller or other-broker payments are credited. The source of payment does not itself determine representation. Expiration ends the service period, but a protection clause may preserve a fee for specified later acquisitions. Ending agency does not necessarily eliminate contract liability; a mutual written release can settle remaining duties.

Texas's current written-agreement rule

Under Tex. Occ. Code § 1101.563, the required residential buyer agreement must precede a showing, or presentation of an offer if no property will be shown. It must identify services, termination date, exclusivity, representation status, and compensation and its determination, and conspicuously disclose that compensation is fully negotiable and not set by law. A limited showing agreement without buyer representation must be nonexclusive, last no more than fourteen days from execution, and be followed by a separate agreement for additional brokerage acts. An agency disclosure explains relationships; it is not a substitute for the service agreement.