Why Do I Have to Sign a Buyer Agreement Before Touring Homes in California?

It can feel like a big step when you only want to see a house on Saturday. The agreement is there so you know what you're getting before anyone works on your behalf.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. I want every buyer to understand this agreement before signing it.

Two changes happened close together.

1. The 2024 NAR settlement practice changes. As of August 17, 2024, an MLS participant who is working with a buyer must have a written agreement with that buyer before touring a home, including live virtual tours. Offers of buyer agent pay were also removed from the MLS.
2. California law, AB 2992. It took effect January 1, 2025, and added Civil Code section 1670.50. It requires a buyer's agent to have a signed buyer agreement "as soon as practicable," and no later than when you sign an offer to buy.

So the state deadline is your offer, and the national practice rule is your first tour. Most agents will ask you to sign before the first showing.

Under California law, the agreement must include, at a minimum:

• The agent's compensation: the amount, written so you know the number (a flat fee, a percentage, an hourly rate, or even $0). It cannot be open-ended, like "whatever the seller offers."
• The services: such as finding homes, setting up tours, negotiating offers and guiding you through escrow.
• When compensation is due: usually at closing, yet read this part carefully.
• How the agreement ends: an expiration date and how either of you can cancel.

A few other rules protect you:

• Three months at most. The agreement can last no longer than three months from the date it was made.
• No automatic renewal. Any renewal has to be in writing, dated and signed by everyone, and each renewal is also limited to three months.
• A required disclosure first. Before you sign, your agent must give you the state's agency disclosure form, which explains who represents whom.
• A cap on pay. Under the NAR practice rules, your agent cannot receive more from any source than the amount you agreed to in writing.

Agreements can be exclusive or non-exclusive, and some are limited to one property or area. Ask which kind you're being offered.

Agent pay is not set by law, and it's fully negotiable between you and your agent. Under the NAR practice rules, the agreement must say so clearly.

You also have options for where that pay comes from:

• You can ask the seller to pay it. Buyers can request and negotiate for the seller or the seller's agent to pay their agent. This is often written into your offer.
• Sellers can still help in other ways. Sellers can offer buyer concessions, such as help with closing costs.
• You stay responsible for the agreed amount if the seller pays less, unless your agreement says otherwise. Read that section slowly and ask what happens in that case.

The goal is no surprises at the closing table.

1. How much is your compensation, and how is it written in the agreement?
2. If the seller pays less than that amount, what would I owe, if anything?
3. Is this exclusive or non-exclusive? Is it limited to certain homes or areas?
4. What exact services will you provide from search through closing?
5. When does this agreement end, and how can I cancel early if it isn't working?
6. If I find a home on my own, or tour one with another agent, how does this agreement apply?

Read the full agreement before signing, and ask about anything that isn't clear. If you have a legal question about a contract, a real estate attorney can advise you.

If you're starting to look at homes in Orange County and want to understand the agreement before you sign anything, I'm happy to walk you through it, with no pressure. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.