Hey there, Chicago homebuyers!
If you’ve started looking for a home recently, you might have noticed that the process seems a little bit different. You may remember being able to call up your realtor and just casually checking out some properties. But things have changed, and before your agent can even unlock a front door for you now, you’ll need to sign a buyer agency agreement.
We’re the Ben Lalez Team, and after helping over a thousand families buy and sell Chicago real estate over the last decade, we know these new rules are still confusing to many buyers. That’s why we’re breaking down everything you need to know about buyer agency agreements in plain English so you understand the process clearly.
What Exactly Is A Buyer Agency Agreement?
Think of it as a contract that officially makes a real estate agent your agent. Before August 17, 2024, this was mostly optional. You could work with different agents, shop around, and see who you jived with. You may have heard of the recent massive lawsuit involving the National Association of Realtors. As a result of the settlement, you must sign this agreement before any agent can show you a single house.
The Chicago Association of Realtors has a standard form that most agents use, a 3-page legal document that spells out exactly what your agent will do for you, how long you’ll work together, and how your agent will get paid.
The Part That Catches Most Buyers Off Guard
Here’s what some buyers don’t realize – you might end up paying your agent’s commission yourself.
In the old system, the seller almost always paid both agents’ commissions. It was baked into the listing price, and buyers rarely thought about it. This is how it works now:
Your agent will first negotiate to receive payment from the seller. If the seller says “nope, we’re not paying buyer agent commissions,” you will be responsible for your agent’s commission on closing day.
The buyer agency agreement has a blank spot where you fill in the percentage you’ll pay your agent if the seller doesn’t cover it. This is completely negotiable, but many buyers don’t realize they can negotiate this number.
Understanding The Exclusive Part
When you sign this agreement, remember that you’re committing to work exclusively with one agent. That means you can’t call up three different agents to show you houses in different neighborhoods. You can’t get second opinions. You can’t casually browse with your friend’s agent just to ‘see what they think’ anymore.
This exclusivity lasts for whatever time period you agree to. This could be a week, a month, six months, or until you buy a house.
Here is an often misunderstood fact. Even after your agreement ends, you might still owe your agent money. The agreement includes a section that discusses a “protection period,” where if you buy a house that your agent showed you during the agreement (even months later), you still owe them a commission. The form allows you to specify the duration of this protection period.
What Your Agent Actually Does (And Can’t Do)
The agreement is surprisingly detailed about what services you’re getting for your money. Your agent will:
- Help you find properties that match what you’re looking for
- Schedule showings and tours
- Negotiate offers and counteroffers on your behalf
- Keep your financial information confidential
- Help coordinate financing and closing
It’s important to know what your agent can’t do:
- Act as a home inspector (they’re not experts on structural issues)
- Give legal or tax advice
- Guarantee the accuracy of square footage or lot sizes
- Show you properties that aren’t on the MLS unless you ask in writing
Think of your agent as a skilled negotiator and market expert, not as someone who can tell you if the foundation is cracking or if you’re getting a good deal on property taxes. Your agent can refer you to specialists where required.
The Dual Agency Situation
In certain scenarios, your agent might also represent the seller in the same transaction. This is known as dual agency, and it may sound like a conflict of interest, but it’s perfectly legal in Illinois if both parties agree to it.
The agreement includes a section specifically addressing this possibility. If you check “yes,” you’re giving your agent permission to represent both you and the seller if the situation comes up. If you check “no,” your agent would have to refer you to someone else in their brokerage if they also represent the seller.
When an agent represents both sides, they can’t give either party advice about pricing or negotiations. They become a neutral facilitator rather than an advocate for either side.
Retainer Fees And Other Costs
Some agents are now charging upfront retainer fees just for signing the agreement. This could range from a few hundred to a few thousand dollars, and it’s non-refundable, even if you never make a purchase.
Not all agents charge retainers, and this is definitely negotiable. If an agent wants a retainer, ask them to explain exactly what services that money covers and whether it gets credited toward your final commission if you do buy a house.
How To Protect Yourself
Negotiate the time period. Don’t agree to a six-month exclusive arrangement with an agent you’ve never worked with. Start with 30 days or even shorter if you want to test the relationship.
Understand the commission structure. Ask your agent to walk you through different scenarios. What if the seller pays? What if they don’t? What if they pay partial commission? Make sure you know the maximum you could end up owing.
Get clarity on services. Different agents offer different levels of service. Some provide detailed market analysis and staging advice. Others focus mainly on scheduling showings and writing offers. Know what you’re getting for your money.
Read the termination clause. It explains how you can end the relationship if things aren’t working out.
Ask about the protection period. This is the period after your agreement ends, during which you’d still owe a commission on properties your agent showed you. Some agents want six months; others are fine with 30 days.
What This Means For Different Types Of Buyers
First-time buyers: A buyer agency agreement is a good thing because it means your agent is legally obligated to work in your best interest. Just make sure you understand the financial commitment upfront so there are no surprises later.
Experienced buyers: You might find the new process more complicated, especially if you’re used to working with multiple agents in the past. It’s now more important than ever to find one outstanding Chicago agent to work for you.
Investor buyers: Pay special attention to how the agreement handles multiple properties and lease transactions. Some agreements charge commission on rentals too.
Cash buyers: Even though you’re not financing, you still need to consider how you’ll pay your agent’s commission if the seller won’t cover it.
The Bottom Line
The new buyer agency agreement system is in place to protect buyers and brokerages. It does require more upfront thought and commitment, so make sure you understand the process and what you’re signing.
You’re hiring someone and potentially agreeing to pay them thousands of dollars, so ask lots of questions.
Remember that everything in these agreements is negotiable – the commission, the length of the contract, the services provided, and even whether you pay a retainer. All of this can be negotiated based on your needs and comfort level.
Frequently Asked Questions
Can I negotiate the commission percentage?
Absolutely. The percentage is completely negotiable, and it can depend on the level of service they provide and the local market conditions.
What if I want to fire my agent after a few days?
Check the termination verbiage in your agreement. Some allow you to end the agreement at any time with written notice, while others require you to wait out the full term. Ask ahead of time to be sure.
Do I still owe commission if the deal falls through because of financing?
Generally, no. Commission is typically only owed when you successfully close on a property. However, if the deal doesn’t close because of something you did out of negligence (like backing out without a valid contingency), you might still owe commission. Read your agreement carefully.
Can I work with different agents in different neighborhoods?
Not if you’ve signed an exclusive agreement. However, you can negotiate a geographic area into your buyer agency agreement if you only want to use that agent to search for properties in specific locations.
What happens if I find a house online and want to see it, but it’s listed by a different brokerage?
Your agent can show you any house listed on the MLS, regardless of which brokerage it’s listed with. Ask your agent to book the appointment for you.
Buying a home is likely the biggest financial decision you’ll ever make. Take the time to understand these agreements, ask lots of questions, and work with someone you trust.
If you have more questions about the buyer agency agreement or any part of the buying process, give us a shout, and we’ll be happy to grab a coffee with you and answer all of your questions!
