Explainer
Buyer agreements and commissions in Minnesota
What Minnesota law requires, what changed in 2024, what’s negotiable, and what to ask before you sign.
Minnesota already required a signed agreement
Well before the 2024 settlement, Minnesota law said: “Licensees shall obtain a signed buyer’s broker agreement from a buyer before performing any acts as a buyer’s representative.” (Minn. Stat. 82.66, subd. 2) The agreement must be in writing and include:
- A definite expiration date.
- The amount of compensation, or the basis for computing it.
- The services the broker will provide, and what entitles the broker to be paid.
- Whether, and how, the agreement can be canceled.
- Any override clause, which only applies if the broker gives you a protective list within 72 hours after the agreement expires.
- A boldface notice that compensation “shall be determined between each individual broker and the broker’s client.”
- A dual agency disclosure, for when you want to buy a home your broker also has listed.
What changed in August 2024
The National Association of REALTORS® settled the commission lawsuits in March 2024. Two rule changes took effect nationwide on August 17, 2024 (VA News, NAR):
- Offers of pay to buyer agents are no longer allowed on the MLS.
- Agents who use an MLS must have a written agreement with a buyer before touring a home, in person or by live video.
What the agreement has to say about pay
- A specific amount or rate, or how it’s calculated: for example $0, a flat fee, a percentage or an hourly rate. Not a range, and not “whatever the seller offers.”
- That the agent can’t collect more than that amount from any source.
- That commissions are not set by law and are fully negotiable.
Everything else is negotiable too: the services, how long the agreement lasts, and how either side can end it. (NAR consumer guide)
Who pays now?
Your agreement says what your agent is owed. You can still ask the seller to pay it, or part of it, in your offer. If the seller says no, you may owe the difference yourself. A fee you pay yourself may not be financeable, depending on your loan type, so ask your lender how it affects the cash you’ll need at closing.
What it means for first-time buyers
Cash at closing matters most for buyers with the least of it.
Questions to ask before you sign
- What exactly will you do for me?
- What’s your fee, and will you ask the seller to pay it?
- If the seller won’t, how much cash would I need at closing? (Ask your lender too.)
- When does this agreement expire, and how do I cancel it?
- Is there an override clause, and how long does it last?
- Can we limit it to one home or a short trial period?
General information, not legal advice. Read your agreement carefully and ask an attorney if you have questions.
Frequently asked questions
Did Minnesota require buyer agreements before the 2024 NAR settlement?
Yes. Minnesota law already required licensees to get a signed buyer’s broker agreement before performing any acts as a buyer’s representative (Minn. Stat. 82.66, subd. 2). The 2024 NAR settlement added a nationwide rule: a written agreement before touring a home, in person or by live video, with an agent who uses an MLS. (NAR)
What must a Minnesota buyer’s broker agreement include?
Under Minn. Stat. 82.66, subd. 2: a definite expiration date; the amount of compensation, or the basis for computing it; the services the broker will provide and what entitles the broker to be paid; whether and how the agreement can be canceled; any override clause; a boldface notice that compensation is determined between each broker and the broker’s client; and a dual agency disclosure. Under the NAR settlement it must also state a specific amount or rate, or how it’s calculated (not a range or “whatever the seller offers”), say the agent can’t be paid more than that from any source, and say commissions are not set by law and are fully negotiable. (Minn. Stat. 82.66, NAR)
Do I have to pay my buyer’s agent out of pocket?
Not necessarily. You’re responsible for what your agreement says, but you can still ask the seller to pay some or all of your agent’s fee as part of your offer. (NAR)
Can I add my agent’s fee to my mortgage?
It depends on your loan. A fee you pay yourself may not be financeable, depending on your loan type, and would then be cash due at closing along with your down payment and closing costs. Ask your lender before you write an offer.
Can I sign an agreement just to see one house?
Ask. The length of the agreement and the services it covers are negotiable, like the fee, and agents can offer shorter or more limited agreements where state law allows. (NAR)
Questions about a buyer agreement?
Ask any agent to walk you through theirs, line by line, before you sign anything.