Let’s begin with when you do NOT need one. You sign a listing agreement with a now seller and someone calls you and asks you to show that property. The question becomes, do you represent that potential buyer? If the answer is no, then you do NOT need any sort of agency agreement with them.  

What if the listing agent is busy and asks someone else in their firm to show the house to the potential buyer? Is that showing agent doing it on behalf of the seller or the buyer? If they are doing it on behalf of the seller, you do NOT need an agreement with the buyer. Remember, your firm owns the listing and when agents in your firm are doing work on behalf of the seller, i.e. showing a house to a potential buyer, you do NOT need an agreement with the buyer.  

However, there is something you may need, and it is found in. § 54.1-2138. Disclosure of brokerage relationship in residential real estate transactions. The settlement did not change Virginia law and if the buyer is unrepresented, you still need to provide a disclosure of relationship, which in short says I represent the seller and not you. This was needed before the settlement, and it is still needed now. The full requirements are in the statute and the link is provided. 

Going full circle, what does it mean to represent that potential buyer? Well, are you providing any licensed services? Are you going to write an offer for them? If the answer is YES and you represent the seller, then that’s dual agency. Do you have consent from the seller and potential buyer to engage in dual agency? Have they been provided with the necessary disclosure, and they signed it?  

Remember, if you are going to engage in dual agency you need to get the disclosure signed which is also the permission to engage in dual agency. This needs to be signed by both the seller and the buyer BEFORE you even begin to “represent” the buyer.  

When do you need an agreement between you and the buyer? Let’s say you do not represent the seller, and someone calls you and wants you to show them a house. Do you need an agreement signed with them? Unequivocally, yes. Then which kind of agreement? Of course, it depends. 

There are various types of agreements out there. You can even sign an agreement to just show a buyer a house. You can sign a limited-service agreement and agree between each other what services you will provide. You can sign a standard agency agreement. The standard and limited-service agreements can be exclusive or non-exclusive. The term can be as short as required to show the house or much longer. What agreement you sign depends on the buyer’s needs and this is something you and the buyer need to discuss before even showing a house. But remember, you should make sure to check with your broker on whether your firm allows independent contractor relationships, and limited-service agreements. 

However, the following inclusions must be made in that agreement, whichever one it may be: 

1. A specific and conspicuous disclosure of the amount or rate of compensation you will receive or how this amount will be determined, to the extent that you will receive compensation from any source.  
2. The amount of compensation in a manner that is objectively ascertainable and not open-ended. 
3. A term that prohibits you from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and 
4. A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable. 

Virginia REALTORS® offers all of these sort of agency agreements, you can find them on your favorite forms provider or on our website. If you have any questions, please reach out to us on the Virginia REALTORS® Legal Hotline.