How to Create an Agency Relationship with a Buyer

Is having a signed written agreement, such as TAR’s Residential Buyer/Tenant Representation Agreement, the only way for a broker to create an agency relationship with a buyer?

No. Although agency relationships can exist when you’re acting on behalf of the buyer without a written agreement, the best way to create an agency relationship is to put the rights and obligations of a broker and his or her client in a signed written agreement,.

In addition to being a good business practice, there are several other reasons why broker-client relationships should be in writing:

1. You cannot enforce your right to collect your commission from a seller or buyer unless you have a signed written agreement with them agreeing to pay your commission, according to Section 1101.806(c) of the Real Estate License Act.

2. Section 1101.559 of the Real Estate License Act requires brokers who act as intermediaries to obtain the written consent of each party in the transaction and that written consent must also state who will pay the broker.

3. Article 9 of the Code of Ethics requires that REALTORS® shall assure whenever possible that agreements shall be in writing for the protection of all parties.

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