A real estate agency agreement is the written contract that turns a casual conversation with an agent into a legally binding relationship: it names the agent as your representative, sets out what they’ll do for you, how long the arrangement runs, and what you owe them in compensation. Sellers have signed these for decades under the familiar name “listing agreement.” Buyers used to go through entire home searches without signing anything, but that changed on August 17, 2024, when new rules from the National Association of Realtors settlement took effect. Now, any agent who participates in a Multiple Listing Service must have a written agreement with you before showing you a property, in person or virtually.1National Association of REALTORS. What the NAR Settlement Means for Home Buyers and Sellers
What the Agreement Actually Does
When you sign, you become the “principal” and the agent becomes your legal representative. That triggers fiduciary duties, meaning the agent owes you a higher standard of care than they owe to anyone else in the deal. Across most states, those duties include loyalty (your interests come before their commission), confidentiality (your financial situation and urgency stay private), obedience to your lawful instructions, disclosure of anything that could affect your decisions, accounting for money and documents that pass through their hands, and reasonable professional care.
These duties flow one direction only, from agent to client. The other side of the transaction gets honesty and fair dealing but nothing more. That asymmetry is the whole reason the agreement matters: without it, no one on your side is legally bound to put you first.
Seller Listing Agreements
A listing agreement authorizes an agent or brokerage to market your property, arrange showings, negotiate on your behalf, and guide the deal through closing. The type you sign controls when a commission is owed and whether you can sell on your own.
Exclusive Right to Sell
This is the version most agents will put in front of you. You owe the listing agent a commission no matter who finds the buyer. If a neighbor knocks on your door and offers to buy without any agent involvement, the commission is still due. In exchange, agents working under this structure have every reason to invest in serious marketing, because they can’t be cut out of the payday. Some agreements allow you to carve out specific named individuals before signing, but you have to negotiate that upfront and get it in writing.
Exclusive Agency
Only one brokerage represents you, but you keep the right to find a buyer independently without owing a commission. If the agent delivers the buyer, you pay. If you do, you don’t. Agents are generally less enthusiastic about this structure for the obvious reason that their marketing investment can be undone by a seller’s independent sale, so premium marketing effort may be harder to secure.
Open Listing
You can hire multiple agents at once, and only the one who actually produces the buyer gets paid. If you find the buyer yourself, no one does. In practice, open listings tend to produce lukewarm effort and limited exposure, since any agent’s work could end up compensating a competitor.
Buyer Agency Agreements Under the 2024 Rules
The NAR settlement did more than require buyers to sign something. It imposed specific content rules on what the agreement must say. Every written buyer agreement with an MLS-participating agent must include:
- A specific compensation amount or rate stated as a dollar figure, flat fee, percentage, or hourly rate. Open-ended terms like “whatever the seller offers” are not permitted.
- A cap on what the agent can receive. Your agent cannot collect compensation from any source that exceeds the number in your contract.
- A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
Offers of buyer agent compensation can no longer appear on MLS platforms. Sellers can still offer to help cover a buyer’s agent fees, but any such offer has to happen outside the MLS.1National Association of REALTORS. What the NAR Settlement Means for Home Buyers and Sellers
The requirement to sign kicks in before a showing. Visiting an open house on your own, or making initial inquiries about an agent’s services, does not require a signed agreement.2National Association of REALTORS. Consumer Guide: Why Am I Being Asked to Sign a Written Buyer Agreement
Because the agent’s compensation is now explicit and personal to you, the conversation that should always have happened is now unavoidable. The rate, the length of the term, and the scope of services are all negotiable. A shorter term, somewhere between 30 and 90 days, is a reasonable starting point when you’re new to an agent and want a trial period before committing further.2National Association of REALTORS. Consumer Guide: Why Am I Being Asked to Sign a Written Buyer Agreement
Dual Agency and Designated Agency
Dual agency happens when one agent or brokerage represents both buyer and seller in the same transaction. The structural problem is that the agent can’t advocate hard for your price while simultaneously advocating hard for the other side’s. Roughly eight states prohibit it outright. Where it’s permitted, both parties must give informed, written consent, and even then the dual agent typically cannot share either party’s confidential information with the other side. If a dual agency disclosure lands in front of you, you can decline and bring in your own independent agent.
Designated agency is the common compromise: when both parties are clients of the same brokerage, the broker assigns separate agents to each side, and each agent owes full fiduciary duties to their own client. Disclosure and consent are still required, but each party has someone working for them alone.
Key Clauses to Read Before You Sign
Listing agreements and buyer agreements share most of the same building blocks. These are the ones that catch people out.
Compensation and When It’s Earned
Total commissions have historically run around 5% to 6% of the sale price, split between the listing and buyer agents, though those numbers are shifting after the settlement. The important point is that no rate is standard, required, or set by law.
Pay attention to the language about when the commission is “earned.” Many listing agreements say the agent earns the full commission the moment they produce a buyer who is ready, willing, and able to purchase on your terms. Under that wording, you can owe a commission even if you later decide not to sell.
Duration
Every agency agreement should have a defined start date and end date. Listing agreements commonly run three to six months. Buyer agreements can cover anything from a single showing to several months. An open-ended agreement with no end date makes it unnecessarily hard to switch agents, so insist on a term.
Protection (Holdover) Clauses
This is the clause most likely to blindside a seller. A protection or holdover clause entitles the agent to a commission if your property sells within a specified window after the agreement expires, provided the buyer was someone the agent introduced during the listing period. Protection periods typically run 30 to 180 days and are negotiable.
To enforce the clause, most agreements require the agent to deliver a written list of the specific buyers they introduced, within a set number of days after the agreement ends. If you re-list with a different brokerage and one of those original buyers resurfaces, many agreements reduce or eliminate the first agent’s claim. Read this clause before you sign, not after a commission dispute lands in your inbox.
Dispute Resolution
Many agreements send disputes first to mediation and then to binding arbitration. Mediation is generally non-binding and worth agreeing to. An arbitration clause means giving up the right to take the dispute to court, which cuts both ways.
Getting Out of an Agency Agreement
The simplest exit is to let the agreement expire on its end date. Completing the transaction also ends the relationship, though any commission earned survives.
If you need out early, the realistic routes are:
- Mutual release. Ask the brokerage, not just the individual agent, to release you from the contract in writing. Many will agree when the relationship has genuinely broken down. Get the release signed and keep a copy.
- Breach by the agent. Failure to perform, including ignored calls, missed deadlines, or violations of fiduciary duties, may justify termination. Document the failures in writing before you try to cancel.
- A contract termination clause. Some agreements let either party terminate with written notice, sometimes with a cancellation fee or reimbursement of the agent’s out-of-pocket costs.
Direct any early termination request to the broker of record at the brokerage, not just your agent. Ask for a signed mutual cancellation that states the agreement is terminated and spells out which, if any, properties remain covered by a protection period. Until you have that signed release, you may still owe a commission if you buy or sell a property the agent was involved with. Starting work with a new agent before formally ending the old agreement is one of the quickest ways to end up in a commission dispute.
What to Negotiate Before You Sign
Agency agreements are negotiable, not take-it-or-leave-it forms, however they’re presented. Before you sign, focus on these points:
- Duration. Shorter favors you, especially early in a new agent relationship.
- Compensation. Confirm the rate, when it’s earned, and who pays. Ask specifically what happens if the deal falls through after the agent has technically earned the commission.
- Exclusivity. Know whether you’re locked into one agent or keep the right to work with others or find a buyer yourself.
- Protection period. Understand how long the holdover lasts and what triggers it. Push back if the proposed window exceeds 90 days.
- Termination rights. Look for a clause allowing exit on written notice, and know the amount of any cancellation fee.
Agents negotiate for a living. If an agent won’t discuss the terms of their own agreement, that tells you something useful about how the rest of the relationship is likely to run.