Buyer/Tenant Representation Agreements

As of December 16, 2024, the Addendum Regarding Brokers’ Fees (TXR 2406) and the Amendment to Representation Agreement (TXR 2701) will no longer be available for use on the Texas REALTORS® website or through approved form vendors. These forms filled gaps during the transition to the new NAR MLS rules regarding broker compensation.

The Addendum Regarding Brokers’ Fees (TXR 2406) allowed sellers and buyers to agree to the payment of broker compensation in a way that was not available in the One to Four Family Residential Contract (TXR 1601). On December 16, 2024, the updated TREC residential sales contracts will be available on zipForm and other approved forms providers. The updated agreements allow the parties to negotiate seller concessions to cover buyer’s broker compensation within the contract. With the updated forms, TXR 2406 is no longer needed for broker compensation.

The Amendment to Representation Agreement (TXR 2701) was created to allow brokers to easily comply with the new requirements for representation agreements by amending the Texas REALTORS® representation agreements that were in use prior to June 24, 2024. Texas REALTORS® representation agreements entered into after June 24 are already in full compliance and do not need TXR 2701. At this time, REALTORS® should only use the most recent versions of the representation agreements available on al10669.com and through approved forms vendors.

No. When hosting an open house on behalf of the seller only, agents are not required to enter into written agreements with buyers that attend the open house. This applies to the listing broker, any associated broker or sponsored sales agent, and an agent outside of the listing brokerage firm that gets permission from the listing broker to host an open house. If the open house is being held on behalf of the seller only, then agents are not working with the buyer.

While hosting the open house, it’s important to remember that your fiduciary duty is owed to the seller! If an agent subsequently agrees to represent a buyer, that agent will need a written agreement before showing homes going forward. 

Texas REALTORS® offers two agreements that can be used to satisfy the written agreement with a buyer requirement: Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501) and Residential Buyer/Tenant Representation Agreement – Short Form (TXR 1507).

Texas REALTORS® buyer representation and listing agreements available before June 24, 2024, do not contain the required terms and disclosures to meet new MLS rule changes. These agreements must be amended to comply with the new MLS rules which went into effect August 17, 2024. If a representation agreement was signed prior to June 24, and the buyer or seller was not under contract by August 17, the agreement must be amended. If the buyer or seller is under contract on a property by August 17, the representation agreement does not need to be amended.

Members may use Amendment to Representation Agreement (TXR 2701) with older versions (pre-June 24) of the following representation agreements to bring them in compliance with NAR MLS policies:

• Residential Real Estate Listing Agreement, Exclusive Right to Sell (TXR 1101)
• Residential Real Estate Listing Agreement, Exclusive Right to Lease (TXR 1102)
• Farm and Ranch Real Estate Listing Agreement, Exclusive Right to Sell (TXR 1201)
• Residential Buyer/Tenant Representation Agreement - Long Form (TXR 1501)

After June 24, the updated Texas REALTORS® forms should be used for all new residential representation agreements. Note: The new Buyer/Tenant Representation Agreement – Short Form (TXR 1507) complies with MLS policies changes and does not have to be amended.

Yes. A listing broker and REALTORS® associated with the listing broker represent the seller, so they would not need a buyer’s representation agreement to show the house to a potential buyer. The listing agent may want to use the Representation Disclosure (TXR 1417) to establish that the listing agent does not represent the potential buyer.

No, you do not need a written agreement if you are hosting the open house or otherwise providing access to the property only on behalf of the seller. If your broker has a listing on that property, you, as an agent associated with that broker, can show that home on behalf of the seller and will owe a fiduciary duty to the seller of the home. If an unrepresented buyer walks in and asks to see the property you are holding open for the seller, you are showing that buyer the home while representing the seller’s interest.

Note: If that buyer expresses an interest in having you work for the buyer to view other homes or submit an offer, you would be required to obtain a buyer representation agreement with that buyer. If an offer is made on your brokerage’s listing, you will need authorization from both the seller and the buyer to act as an intermediary.

No. If listing agents and subagents are showing the property on behalf of the seller only, they are not required to get a written agreement signed with a buyer to show a home. The MLS policy states that an MLS participant working with a buyer must enter a written agreement with the buyer before touring (showing) a home. An agent is “working with a buyer” when the agent is representing the buyer’s interests while providing brokerage services. When listing agents and subagents are only representing the seller’s interest, they are not working with the buyer.

A subagent is defined under Texas law as a license holder who represents a principal through cooperation with and consent of a broker that represents the principal and is not sponsored by or associated with the principal’s broker (1101.002(8) Texas Occupations Code). In other words, a license holder not associated with the listing broker but still representing the seller's interest would be a subagent of the seller.

While providing brokerage services, such as showing property, a license holder must have a clear understanding of who the agent represents. When listing agents and subagents are representing the seller, they have a fiduciary duty to protect and promote the interest of the seller.

A license holder cannot just say that he is a subagent of the seller to avoid the requirement of having a written agreement with the buyer. A subagent represents the seller and owes the seller a fiduciary duty! If an agent is acting in a subagency capacity, he must first get the consent of the listing broker and must provide services in a way that protects and promotes the interests of the seller. A subagent must also fully disclose to buyers that the agent is representing the seller.

Texas REALTORS® offers two agreements that can be used to satisfy the written agreement with a buyer requirement: Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501) and Residential Buyer/Tenant Representation Agreement – Short Form (TXR 1507).

No. NAR’s MLS policy mandates use of written agreements prior to showing one-to-four family residential properties. However, MLSs have discretion to adopt additional policies. Check your local MLS rules for specific requirements that may apply to other types of properties. 

Yes. Under the NAR policy, a written buyer agreement must be signed prior to showing a home. A “home” means a one-to-four family residential dwelling. The policy does not include exceptions for the property's size or intended use. If the property contains a home, regardless of acreage, a signed agreement with a buyer would be required to show the property. Note: This requirement does not affect MLS property type or the sales contract. Continue to select the applicable property type in the MLS and use the Farm and Ranch Contract when appropriate.

NAR’s MLS rules require that the amount of broker compensation stated in a buyer representation agreement must be objectively ascertainable. This requires that compensation be a definite or specific amount or rate. NAR has provided a few examples of what type of compensation is not considered objectively ascertainable. The amount or rate of compensation cannot be stated as a range, for example from X% to X%. The amount or rate cannot vary depending on the source of payment, for example a different amount if the listing broker pays the fee versus if the buyer pays the fee. 

Yes, they can earn those bonuses if the broker discloses the specific amount of compensation offered to the broker and receives authorization from the buyer. The broker can use the Amendment to Buyer/Tenant Representation Agreement (TXR 1505) to specify the amount of the bonus the broker will receive and obtain the buyer’s authorization. TXR 1505 requires the bonus to be specific to a particular property. Since the bonus is being paid by the seller or the seller’s agent, the buyer is not obligated to pay the bonus.

Yes. The representation agreement can be amended between the parties to the agreement at any time. For example, a builder may offer broker bonuses that may not have been included in the original representation agreement. If the buyer agrees, the parties may amend the representation agreement to include the bonus amount. 

Yes, but only if the buyer representation agreement is amended. Per MLS Policy Statement 8.13, buyer’s brokers cannot accept compensation above the amount listed in the buyer representation agreement. If the buyer agrees, you can use Amendment to Buyer/Tenant Representation Agreement (TXR 1505) to amend the amount allowed under the buyer/tenant representation agreement.

No. The buyer/tenant representation agreement is a confidential document between the buyer and that buyer's broker. Under NAR policies, a buyer’s broker is not required to disclose to the seller or listing broker the amount of compensation the buyer is paying. Just as the listing broker is not required to disclose the terms in that broker's listing agreement.

It is inappropriate for brokers to demand to see another brokers' confidential agreements. They are essentially demanding that brokers violate their fiduciary duty to their clients. If the listing broker and seller have agreed to compensate a buyer’s broker in a listing agreement, the listing broker should execute a broker-to-broker compensation agreement with a buyer’s broker for the amount agreed to in the listing agreement. The brokers can use the Compensation Agreement Between Brokers (TXR 2402). If the compensation the seller or listing broker is paying the buyer’s broker is more than what is stated in the buyer representation agreement, the buyer and buyer’s broker can amend their agreement or make other arrangements on how to account for any differential.

If the listing broker or seller refuses to sign either the compensation agreement or sales contract without being provided the buyer’s representation agreement, buyer’s agents should discuss the situation with their buyers. The buyers have several options. The buyers may not want to submit an offer on that property; they may want to submit an offer without providing a copy of the buyer representation agreement to begin negotiations; or the buyers can give permission to disclose the terms of the buyer’s representation agreement to submit an offer.

TXR 1507 is a representation agreement. It allows brokers to limit the scope of their representation, as permitted by Texas law. While brokers who have agreed to provide showing services are not providing comprehensive brokerage services, they have agreed to provide some brokerage services, making

the potential buyer a client and not a customer. Brokers must still meet their legal and ethical duties while performing the limited services they’ve agreed to in their representation agreements. Section 1101.557 of the Texas Occupations Code requires license holders to, at minimum, answer the party’s questions and present any offer to or from the party.

Section 1101.557 of the Texas Occupations Code requires license holders to, at minimum, answer the party’s questions and present any offer to or from the party. This simply means the agent is required to give the offer to the intended party. This requirement is intended to prevent agents from withholding information from their clients. If the seller sends an offer to an agent, the agent cannot hold on to the offer but must forward the offer to the buyer. Likewise, if a buyer has an offer to send to the seller, the agent will have to forward the offer to the seller. This does not require the agent to write the offer or negotiate the terms for the buyer or seller if the agent hasn’t agreed to provide those services.

If a buyer gives the buyer’s agent an offer under a showing services agreement, the agent will have to forward the offer to the seller. It is not anticipated that this would happen very often. Also keep in mind that the agency relationship exists only for the term of the agreement. If the showing services agreement is for one day or a weekend, it is unlikely that a buyer will provide an agent with an offer during that short period of time.

Brokers are permitted under the law to agree on which services the broker will provide to their clients. For example, there are limited services listing brokers and there are referral agents that have agreed to provide only certain services to their clients. These brokers can perform the limited services they’ve agreed to and still meet their legal and ethical duties.

No. Texas REALTORS® offers two buyer representation agreements that can be used to comply with the requirement to have a written agreement signed before showing a home. Members can choose between the traditional Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501) or the new Residential Buyer/Tenant Representation Agreement - Short Form (TXR 1507).

No. Brokers are not required to accept a certain type of payment. Brokers can set their own policies and procedures to determine what types of payment they will accept.

Yes. The broker and buyer can agree on any amount. Keep in mind that per MLS Policy Statement 8.4, brokers and agents must not represent that their brokerage services to a client or customer are free or available at no cost to clients, unless the broker or agent will receive no financial compensation from any source for those services.

No. TXR 1507 can be used for multiple showings at different properties. Paragraph 3 allows the broker and the client to specify the market area, which could be one property, a subdivision, a city, county, or zip code, etc.

Under the showing services option, brokers have only agreed to provide clients with access to properties in the defined market area. Any additional services desired by clients, including activities like drafting offers, advising on terms of offers, or negotiating with sellers on the client’s behalf, must be agreed to by the client. There are a couple of options the broker and client can consider to add full services. The broker and client can amend the Residential Buyer/ Tenant Representation Agreement – Short Form (TXR 1507) to full services using Amendment to Buyer/Tenant Representation Agreement (TXR 1505) if the original agreement for showing services is still in place. Alternatively, the parties can choose to execute a new Residential Buyer/Tenant Representation Agreement –Short Form (TXR 1507) or Residential Buyer/Tenant Representation Agreement – Long Form (TXR 1501) to provide a full range of services. The parties should also determine if intermediary authorization is needed and what the broker’s fee should be.