Jul 27, 2026
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Add us on GoogleTwo years ago, a huge class-action lawsuit earned homebuyers protections that experts hoped would improve transparency. Instead, it seems it has given buyers a new way to be forced into an unfair contract.
Two years ago, the National Association of Realtors (NAR) settled a class-action lawsuit for $418 million. The lawsuit alleged that hundreds of thousands of sellers were forced into paying their real estate agents untenable commission fees.
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After that lawsuit, NAR updated its policy to require that buyers sign buyer representation agreements before their agent shows them any houses. The goal was that buyers would know exactly what to expect in terms of fees and buyer-side requirements before they got too deep into the house-buying process with a specific realtor.
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Instead, some buyers are being given surprise contracts they’re expected to sign on arrival at the home they were expecting to tour — locking them into deals they didn’t even realize they were making.
“The idea that buyer-broker agreements have to be signed before they show any houses is great,” said Doug Miller, a Minnesotan real estate lawyer, in an interview with Business Insider. “But the practice of springing this on a consumer at the threshold is amazingly unfair and dishonest.”
Here’s what to expect from buyer representation agreements, as well as how to navigate them during your own house hunt.
Broker fees, exclusivity requirements, and even punishments for not finding a home
Despite the reasoning for this rule being implemented in the first place, buyer representation agreements don’t just govern buyer fees. Real estate agents can put any number of requirements in there — and once you’ve signed, you’ll be expected to follow them.
One potential homebuyer, Kirsten Ganas, signed one such agreement at her first showing with a realtor. Later, when she went to fire that agent, she was surprised to discover she wasn’t allowed to — she had to remain exclusive to that agent for a full year.
“We just got that sick feeling about being stuck in this contract,” said Ganas in an interview with Business Insider.
She was also surprised to discover that, if she and her family chose to rent a home instead during that one-year timeframe, she would be expected to pay the brokerage she worked with one month’s rent, plus nearly $1,000 in fees.
Some experts have been warning about anti-consumer buyer representation agreements since 2024.
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Tanya Monestier, a professor at the University at Buffalo Faculty of Law, called a proposed California Association of Realtors buyer representation agreement “virtually unreadable” in a report for the Consumer Federation of America.
“The Agreement is far too disorganized and complex for the average homebuyer to understand,” says Monestier in the report. “No layperson will be able to understand and appreciate the terms they are agreeing to.”
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Make sure to read the full agreement — and remember you can negotiate
If you’re currently in the process of finding a home, there are some things you can do to protect yourself.
Keep an eye out for red flags during the house buying process. If the real estate agent doesn’t mention any agreements until you’re at your first showing, that’s a red flag that they’re hoping you’ll sign quickly — especially if they rush you through signing or refuse to explain parts of the agreement to you.
Instead, an agent should take time to go over the agreement with you, making sure everyone is on the same page.
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Also keep an eye out for overly-long exclusivity agreements. According to the Greiner Law Corp., it’s most common for buyer representation agreements to have a deal length of 30 to 90 days. If the deal you’re offered is significantly longer, that could be a red flag.
Also keep an eye out for overly large broker’s fees. The Federal Reserve says that the average buyer’s agent commission rate was around 2.7% of the house’s cost in 2025. If your broker fee is significantly higher, or if there’s additional flat fees attached, that could also be a red flag.
If the agreement does not list a firm commission amount — for example, by offering a percentage range instead of a specific percentage — that’s also a red flag.
Remember that, red flags or not, you’re always allowed to negotiate a buyer’s agreement to be a better deal for you.
“You should feel empowered to negotiate any aspect of the agreement with your real estate professional,” says the National Association of Realtors in its consumer guide to buyer agreements. “Compensation between you and your real estate professional is negotiable and not set by law.”
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Kit Pulliam is a DC-based financial journalist with over five years of experience writing, editing, and fact-checking financial content.
