Buyer Representation Agreements in Michigan: What You Sign Before Touring Homes

If you're getting ready to tour homes this winter or next spring, there's one piece of paper you'll see before the fun part starts: a written buyer agreement. Since August 2024, most agents have to have one signed with you before they can show you a home, whether that showing is in person or a live video tour.

I get a lot of questions about it, and I'd much rather you understand what you're signing than feel rushed into it. Whether you're shopping in Flint, Grand Blanc, Fenton, Davison, Flushing, Linden, Holly, Swartz Creek, Lapeer, or over in Livingston or Oakland County, here's how buyer agreements work in Michigan and what you can negotiate.

What Changed on August 17, 2024

As part of the National Association of Realtors® settlement of lawsuits over broker commissions, several practice changes took effect on August 17, 2024 (NAR: What the NAR Settlement Means for Home Buyers and Sellers). For buyers, the big ones are:

• A written agreement before touring. Agents who use the MLS must sign a written agreement with a buyer they're working with before touring a home, including live virtual tours.
• Compensation spelled out up front. The agreement must clearly state how much your agent will be paid, or how that amount will be determined.
• No open-ended amounts. Compensation has to be objective, such as $0, a flat fee, a percentage, or an hourly rate. It can't say something like "whatever the seller is offering."
• A cap. Your agent can't receive more from any source than the amount or rate you agreed to.
• A clear statement that fees are negotiable. The agreement must say, conspicuously, that broker fees and commissions are fully negotiable and not set by law.

The other change: offers of compensation to buyer's agents are no longer allowed on the MLS. Sellers can still offer to pay a buyer's agent off the MLS, and they can still advertise buyer concessions on the MLS, such as help with closing costs (NAR: Consumer Guide to MLSs).

Our local MLS, Realcomp, says the same thing in its settlement FAQ: a buyer's agent needs a compliant written agreement before showing the buyer the first home, compensation must be readily ascertainable and not open-ended, and any compensation from the seller side has to be arranged outside the MLS (Realcomp NAR Settlement FAQs).

When You Do (and Don't) Need to Sign

You'll be asked to sign once you've chosen an agent to work with and before they tour a home with you. You don't need a written buyer agreement just to walk into an open house on your own or to ask an agent questions about their services (NAR: Consumer Guide to Written Buyer Agreements).

That makes the first conversation with an agent a good time to interview them. Ask how they work, what they charge, and what their agreement looks like before anyone unlocks a front door.

Michigan Agency Basics: What a Buyer's Agent Owes You

Michigan law requires a licensee to tell you, in writing, about the types of agency relationships available and the duties each one creates, before you share confidential information like your top price or how quickly you need to move (MCL 339.2517). The state's disclosure form describes it this way: a buyer's agent, under a buyer's agency agreement, acts solely on behalf of the buyer, and will disclose to the buyer known information about the seller that may be used to benefit the buyer.

Under that same law, an agent working under an agency agreement owes you, at a minimum:

• Reasonable care and skill
• Performance of the terms of your agreement
• Loyalty to your interests
• Compliance with state and federal law
• Referral to other licensed professionals for expert advice outside the agent's expertise
• A timely accounting of any money or property they handle for you
• Confidentiality of what you share with them

Your agent must also accept and present offers and counteroffers for the home you want to buy, help you develop, negotiate, and present offers until the purchase agreement is signed and contingencies are satisfied or waived, and help as needed to complete the purchase after that. You can waive some of those services only by knowingly signing a separate limited service agreement.

The disclosure also covers dual agency. One licensee can represent both buyer and seller only with the knowledge and written, informed consent of both, and in that situation they can't share everything they know with either side. If you might be interested in a home your agent or their company has listed, ask how that would be handled before it comes up.

Touring Agreements vs. Full Buyer Agency Agreements

Nationally, NAR's rules don't dictate the type of relationship, the length of the agreement, or the services. An agreement can cover one day, one month, one house, or one ZIP code, and it can be agency or non-agency, exclusive or non-exclusive, as state law allows (NAR: Written Buyer Agreements 101). That's why you may hear about short "touring agreements" for a single showing and fuller buyer agency agreements for the whole search.

In Michigan, the standard Michigan Realtors® forms library includes Exclusive Buyer Agency Contracts (Form J for traditional agency and Form JJ for designated agency), an amendment form, and a Buyer's Broker Compensation Addendum (Michigan Realtors® Real Estate Forms). Michigan Realtors® did not add a separate "touring agreement" form. Its forms committee and legal staff felt the customizable buyer agency agreement, which can be written with a scope and duration that fit the buyer, was the better way to meet the settlement requirement. Brokerages that want to work with buyers as customers instead need their own form (SEBAR / SEM MLS newsletter, Aug. 2024).

A few things to know either way:

• It needs an end date. Under Michigan law, a buyer agency agreement is a "service provision agreement," just like a listing agreement (MCL 339.2501). Michigan's licensing rules say every service provision agreement must have a definite expiration date, can't require you to give notice to cancel on or after that date, must be fully filled in before you sign, and you get a true signed copy at signing (Mich. Admin. Code R 339.22131).
• A "we'll figure out pay later" touring form doesn't work. Michigan Realtors® legal staff have said that a home tour agreement saying no compensation is owed now, but that you'll sign an agency agreement with compensation if you make an offer, is essentially an agreement to agree in the future and isn't legally enforceable (WMLAR: Agency and Open Houses).
• Agency can be implied. That same guidance cautions that under Michigan law, an agency relationship can be implied through words or actions even without a written agreement. Being clear on paper protects you both.

What's Negotiable

NAR's consumer guide puts it simply: you should feel empowered to negotiate any part of the agreement, including the services you want, the length, and the compensation, and you should only sign an agreement that reflects what you actually agreed to (NAR Consumer Guide). Here's what to talk through:

1. Term length

How long does the agreement last? A buyer who's ready to move this month needs something different from a buyer planning to start a search in the spring. Pick a length that fits your timeline.

2. Area or properties covered

The agreement can be broad, like all of Genesee County and surrounding areas, or narrow, like one property or one community. If you're also talking with an agent somewhere else for a different area, make sure the agreements don't overlap.

3. Compensation

It must be a clear number or rate. It isn't set by law, and it's negotiable. Read exactly when it's earned, for example at closing, and whether there are any other fees, such as a retainer, and whether those are credited toward the total. NAR notes that retainers, if any, are something the agreement can address.

4. Who pays

Signing the agreement means you're responsible for paying your agent what the agreement says. That doesn't automatically mean it comes out of your pocket. You can still request, negotiate for, and receive payment toward your agent's compensation from the seller or the listing agent (NAR Consumer Guide). Because of the cap, if the seller offers more than your agreement says, your agent can't collect the extra. Realcomp's FAQ adds that you and your agent can amend the agreement if negotiations produce different compensation.

5. Asking the seller for concessions

Sellers can still offer concessions on the MLS, and Michigan Realtors® has a Seller Concession Addendum for purchase agreements. In your offer, we can ask the seller to help with closing costs or with your agent's compensation, and the seller can say yes, no, or counter. Keep in mind that your lender may limit how much a seller can contribute, so check with them first. My post on buyer closing costs and the Loan Estimate covers the trade-offs.

6. Ending the agreement early

You and your agent can agree to change the agreement, and many agreements spell out how either side can end it. NAR also notes some agreements include a carryover period, where compensation could still be owed if you end the agreement and then buy a home within a certain time afterward. Read that section before you sign.

Questions to Ask an Agent Before You Sign

• Is this an agreement for one showing, or for my whole search? When does it expire?
• What area or properties does it cover?
• What will you do for me, from showings to negotiation to closing?
• What is your compensation, when is it earned, and are there any other fees?
• How will we handle it if a seller offers to pay part or all of your compensation, or offers less than our agreement?
• How do you handle dual agency if I want a home your company has listed?
• How can I end the agreement, and is there a carryover period?

A good agent will be happy to answer every one of these. And if you haven't talked to a lender yet, do that too. My preapproval guide walks through it, and it'll help you know your budget, including how you'd handle any agent compensation the seller doesn't cover. If you're curious how this looks from the other side of the table, my post on listing agreements for sellers explains what sellers sign.

Ready to Start Touring?

I'm glad to sit down with you, go through a buyer agreement line by line, and make sure it fits your timeline, your area, and your budget before you sign anything. No pressure. Call or text me at (810) 962-4908, and let's talk about what you're looking for.

Kennedy Christensen, Tremaine Real Estate. This post is general information, not legal advice. Laws, MLS rules, and industry practices can change, and every agreement is different, so for questions about your specific contract, talk with a real estate attorney.