A written buyer agreement is a contract between a buyer and a brokerage that says what services the buyer gets, what they will pay for them, and how long the deal lasts. In Illinois the state's own rules already call for one, and since August 17, 2024, the National Association of Realtors has required one before an agent who uses an MLS tours a home with a buyer. If you are about to become a broker, this is the first document you will put in front of a stranger, and you will have to explain every line of it.

We have been bringing new agents into the business in Rockford since 1923, and the first buyer meeting has changed more in the last two years than in the decades before. Some new agents still treat the agreement as a form to get through. That is a mistake, because it is the clearest picture a buyer gets of how you work. This guide sticks to two sources, Illinois law and the facts NAR has published about its own practice changes, so you know exactly what each one says. If you are comparing offices, our guide on how to choose your first brokerage shows what to ask about training for these conversations.

What Illinois Law Requires In A Brokerage Agreement

The License Act defines a brokerage agreement as an agreement between a sponsoring broker and a consumer for licensed activities, in return for compensation or the right to receive compensation from someone else. It then says all brokerage agreements shall be in writing, and they may be exclusive or non-exclusive. Section 15-50 repeats the point for anyone who represents a person in buying, selling, exchanging, renting, or leasing real estate. The sponsoring broker must set out the terms of the relationship in a written agreement. That agreement must name the licensees who will act as the person's legal agents, and only those licensees.

The agreement is between the buyer and the sponsoring broker, the licensed brokerage you are registered with. You are named in it as a designated agent, but the brokerage is the contracting party. That distinction matters later, when the buyer wants to end the agreement or someone asks who owes what.

The rules, which are 68 Illinois Administrative Code Part 1450, give the details in section 1450.770. For a buyer or tenant agreement, exclusive or not, the rule lists what the document must contain. It must state the agreed basis or amount of compensation and the time of payment. It must name the sponsoring broker, the designated agents, and the buyers. It must carry the signatures of the sponsoring broker and the buyers. It must list the duties of the buyer's broker. And it must give the duration of the agreement, including an automatic expiration date. If the term is longer than one year, the buyer must have the right to terminate it each year with 30 days of written notice.

Read that list again, because it is shorter than most people expect, and each item is a place a new broker can go wrong. A compensation clause with no basis stated does not meet the rule. A form with no end date does not meet the rule. A form missing the designated agent's name does not meet the rule, and it also undermines the designated agency the Act depends on. Every brokerage agreement must also state that it is illegal for the owner or any licensee to refuse to show, display, lease, or sell to anyone because of a protected class, and the rule lists the classes. For residential property of four units or less, an agreement that has a protection period after it ends must also say that no commission is owed if the buyer signs a valid written agreement with another sponsoring broker during that period.

The rule also covers when the signature has to happen. Section 1450.770 says a licensee shall enter into a written brokerage agreement with a buyer or tenant prior to engaging in licensed activities meant to help that person buy or lease, or as soon as reasonably practical after performing any of them. That is the state's language, and it gives you a short window. The sensible way to work with it is to sign first. A broker who waits until the third showing to bring up paper is relying on the phrase "reasonably practical" and has to defend it later.

There is also a minimum for exclusive agreements. Section 15-75 says all exclusive brokerage agreements must be in writing and must state that the sponsoring broker will provide at least three services. It will accept delivery of offers and counteroffers and present them to the client. It will help the client develop, communicate, negotiate, and present offers, counteroffers, and notices until a purchase agreement is signed and all contingencies are satisfied or waived. And it will answer the client's questions about offers, counteroffers, notices, and contingencies. The rules add a consequence. An agreement that leaves out that minimum-services language, or waives it, is treated as non-exclusive. If you meant to lock in an exclusive relationship, you did not.

Three more rules protect the buyer from sloppy handling. First, the agreement must say that no change to the amount or time of payment of the commission is binding unless it is in writing and signed by the parties. Second, no licensee may use a contract form to change commission terms already agreed upon. Third, under the rule on written agreements, no licensee may sign or accept a document with blanks intended to be filled in after the parties sign. No change may be made to a signed document without the written consent of everyone who signed it, and the signer must get a true copy within 24 hours. These are everyday rules. They are also the ones that come up when something goes wrong, so a new broker should treat every signature as final.

Finally, the Act ties compensation to disclosure. Section 15-35 requires a licensee representing a consumer to discuss the sponsoring broker's compensation policy, including the terms and any amounts offered to cooperating brokers who represent other parties. Section 10-10 adds that you must disclose any compensation you get from a third party in the transaction, any referral to a business in which you hold more than a one percent interest, and in writing, the fact that your brokerage is being paid by both the buyer and the seller. So the buyer agreement is only the start of the disclosure conversation.

What Changed In August 2024

Here we stay with what NAR itself has published. NAR states that it reached an agreement that, if approved by the court, would end litigation over broker commissions brought on behalf of home sellers. NAR also lists practice changes that, in its words, went into effect on August 17, 2024. This guide does not weigh in on the dispute behind that agreement. A broker's job is to know what the practice changes require, so that is what follows.

The first change is the written buyer agreement. According to NAR, real estate agents who use and list properties on a Multiple Listing Service, the local marketplace professionals use to share inventory, are required to enter into a written agreement with buyers before touring a home. NAR says the requirement applies to in-person tours and live virtual tours. It does not apply when a buyer is just speaking to an agent at an open house or asking about the agent's services.

NAR also specifies what those agreements must contain. There are four requirements:

• A specific and conspicuous disclosure of the amount or rate of compensation the agent will receive, or how that amount will be determined.
• Compensation that is objective, such as a flat fee, a percentage, or an hourly rate, and not open-ended. NAR gives an example of what is not allowed: a clause saying the buyer's broker compensation will be whatever the seller offers.
• A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to with the buyer.
• A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

The second change concerns offers of compensation. NAR says that offers of compensation to buyer brokers are no longer allowed on MLS platforms. A seller can still offer compensation off the MLS, and a seller can offer buyer concessions on an MLS, with closing cost help as NAR's example. NAR's summary also notes that the practice changes require compensation disclosures to sellers and to prospective sellers and buyers.

Notice what is the same. NAR says agent compensation continues to be fully negotiable. In its consumer guide it says compensation between a buyer and a real estate professional is negotiable and not set by law. It says a buyer may negotiate the services, the length of the agreement, and the compensation, if any. It says the agreement can be changed if both sides agree, and that agreements may have conditions for ending them, so a buyer should read the text. NAR also says buyers may still ask for, negotiate, and receive payment for their agent from the seller or the seller's agent. And NAR notes that many states have required written buyer agreements for years while some have not, so practices vary by state.

Two sources now apply to an Illinois broker, and they are not the same document. The Illinois rule binds every licensee in the state. The NAR practice changes apply to agents who use an MLS. When two sets of rules cover the same step, follow whichever asks for more, and ask your managing broker when you are unsure. In this case that means a signed agreement before the first tour, with the compensation stated as a plain number or rate, an end date, and the designated agent's name.

What A New Broker Must Explain To The Buyer

Knowing the rules is half the job. The other half is saying it out loud to a buyer who has never signed one of these and is nervous about what it will cost. Here is an illustration, not a real case. A couple has pre-approval in hand and wants to see three houses on Saturday. They are not sure why they have to sign something first, and they ask whether this means they will pay you out of pocket. A good first meeting answers that plainly before the pen comes out.

Start with what the document is. It is the written version of the arrangement. It names the brokerage, names you as the designated agent, states what you will do for them, says what you will be paid and when, and says how long it lasts. It is not a promise from the buyer to buy a house. It is a statement of what each side owes the other for the time the agreement runs.

Then explain the money honestly. The compensation clause has to state the amount or rate. NAR's guidance says it cannot be a range or an open-ended formula. So say the number, then say what the buyer owes if the seller's side pays some or all of it, and what happens if it pays less. The agreement should also say you cannot be paid more than the agreed amount from any source. Tell the buyer, in plain words, that the figure is negotiable and was never set by law. That sentence is one NAR requires you to put in the document, so there is nothing to hide in saying it aloud.

Cover the end date next, with the rules in mind. The Illinois rule requires an automatic expiration date, and if the term is longer than one year the buyer can terminate annually on 30 days of written notice. If the agreement includes a protection period, tell the buyer what it means in practice: if the buyer signs with a different brokerage after the agreement ends and during that period, a clause required by the rule may mean no commission is owed. Read the clause aloud and let them ask questions. A buyer who understands how to leave is more willing to sign.

Explain who you work for. The agreement names you as a designated agent, which means you owe the buyer the duties of a client, including loyalty, disclosure, confidentiality, and reasonable skill and care. Tell them also that the brokerage may represent a seller in the same office, and that if it ever comes to the same house, you will explain the disclosure and consent the Act requires for dual agency before anything happens. The Act's rules on that are strict, and the buyer should hear about them from you first.

Last, handle the paper like a professional. Fill in every blank before the buyer signs. Give the buyer a copy the same day, since the rule gives you 24 hours at most. Never alter a signed agreement without everyone's signed consent. If the buyer wants a different term, change it in writing before signing, and if the negotiation changes your fee, get the new version signed. The paper is your protection. It is also the reason a client can trust you in month three, when a showing runs long and a difficult question comes up.

A few things to avoid. Do not tell a buyer the seller will pay your fee as though it were a fact. NAR's own guidance says buyers may seek payment from the seller, not that they are entitled to it. Do not call the fee standard. NAR requires the agreement to say it is negotiable. And do not start touring before the paper is signed. The Illinois rule gives you a narrow window and NAR's change closes it for agents who use an MLS.

If you are still working toward your license, our guide to getting your Illinois real estate license explains where this fits in the sequence. If you are wondering how buyer compensation shows up in a first-year income, read what real estate agents make in Illinois, especially in year one.

The Bottom Line

The written buyer agreement is a legal requirement and a first impression in the same document. Illinois law requires a written agreement that states the compensation and when it is paid, names the brokerage and the designated agent, lists your duties, carries signatures, and has an end date. NAR's practice changes add a signed agreement before touring for agents who use an MLS, with compensation that is objective, a cap on pay from any source, and a plain statement that fees are negotiable. Offers of compensation are no longer made on the MLS, though sellers can still offer compensation off it.

What you owe a new buyer is a clear explanation and a clean document. That takes practice, and practice is easier with someone beside you. At Gambino Realtors, new agents get a personal business coach who is paid for each sale the new agent makes, weekly classes, sales meetings twice a month, and a mentor who goes along on the first few appointments. Gambino also brings leads to agents. When you compare brokerages, ask whom you would sit next to the first time a buyer asks why the agreement says what it says, and use our guide on how to choose your first brokerage to weigh the answers.

That covers the main points, and a few questions come up every time. Here are the ones buyers and new licensees ask us most.

Frequently Asked Questions