Brokerage Relationships & Buyer-Agent Agreements

For years, Illinois real-estate transactions operated under a flexible structure: buyers often relied on informal or verbal understandings with their agents, trusting that custom and professional norms would guide the relationship. But as of January 1, 2025, that era has come to an end. A regulatory update highlighted by the Kepple Law Group’s “Illinois Real Estate Law Update 2025” confirms a significant shift—Illinois now requires buyer’s agents and buyers to enter into written brokerage agreements, replacing handshake arrangements that long dominated residential practice.

 

This change is more than procedural. It represents a modernization of the state’s real-estate licensing framework and a broader acknowledgment that buyers deserve the same clarity and contractual transparency that sellers have relied upon for decades. For agents, brokerages, and consumers alike, 2025 marks the beginning of a new chapter—one where legal expectations are clearer, fiduciary duties are more explicit, and the boundaries of representation are better defined.

 

As Hirsh Mohindra explains, “Illinois’ 2025 shift toward mandatory written buyer-agent agreements brings long-needed structure to a relationship that was often left to implication. The state is essentially codifying best practice into black letter law.”

 

The Legal Landscape: Why Illinois Changed Course in 2025

 

Illinois already had robust rules governing agency disclosures, conflicts of interest, and the duties owed by licensed real-estate professionals. But where Illinois lagged was in formalizing the buyer-broker relationship.

Before 2025:

• Buyers and their agents could operate under verbal agreements, emails, or just a general understanding.
• Brokers often assumed fiduciary duties without clear contractual terms.
• Compensation expectations were implied but not formally documented.
• Conflicts of interest (such as dual agency) were sometimes explained late in the process.

 

The revised Illinois Real Estate License Act now closes these gaps by requiring written brokerage agreements for buyer representation. The aim is to:

1. Clarify the scope of representation
2. Define compensation and how it is earned
3. Disclose potential conflicts early and explicitly
4. Reduce risk of later disputes

 

The change aligns Illinois with a national movement toward transparency, spurred in part by litigation, shifting commission norms, and consumer demand for clarity.

 

According to Hirsh Mohindra, “Written agreements bring accountability to both sides. Buyers understand what their agent owes them, and agents understand exactly what they must deliver. Everyone benefits from the clarity.”

 

What Must Be Included in a 2025 Illinois Buyer-Broker Agreement?

 

While exact formatting varies by brokerage, the new regulatory environment in Illinois requires that written agreements address several core areas:

1. Scope of Representation

Does the agent represent the buyer exclusively? Or is the brokerage offering designated agency, where the firm represents both sides through different agents?
The agreement must outline:

• Whether representation is exclusive
• The specific duties owed to the buyer
• The duration of the relationship

2. Compensation

Historically, buyer’s agents relied on cooperation from listing brokers for payment. In 2025, compensation models are shifting nationwide, and Illinois wants buyers to understand the terms:

• How the agent is paid
• Whether payment is contingent on MLS-offered compensation
• Whether the buyer must cover any shortfall
• Whether retainer or “success fees” apply

3. Agency Disclosures

Written agreements must clearly state:

• Whether dual agency is permitted
• The implications of dual agency (reduced advocacy, limited negotiation)
• How the brokerage manages conflicts

4. Termination Provisions

Illinois requires clarity around:

• How either party may terminate the agreement
• Whether a holdover period applies
• What happens if the buyer closes on a property found during the representation period

5. Customer vs. Client Status

Not every consumer wants full representation. If the buyer elects to remain a customer—meaning the agent performs ministerial tasks without fiduciary duties—this distinction must now be documented.

These requirements elevate consumer protection and align real-estate representation with standard professional practices in law, accounting, and financial advisory fields.

How the 2025 Law Changes Day-to-Day Real-Estate Practice

For Agents

Agents must now:

• Present buyer-broker agreements at the start of the relationship
• Explain compensation frameworks more thoroughly
• Document agency disclosures early
• Avoid showing properties to buyers who refuse to sign

The practical effect is a shift toward more structured onboarding, similar to how listing presentations operate for sellers.

For Buyers

Buyers gain:

• Transparency around costs
• A clearer understanding of loyalties and conflicts
• A written roadmap of the agent’s obligations
• Earlier disclosure of dual-agency scenarios

Many first-time buyers may initially see the agreement as an administrative burden, but it ultimately protects their rights and ensures consistent service standards.

For Brokerages

Brokerages must:

• Update internal compliance systems
• Train agents on new regulatory expectations
• Maintain written agreements to evidence lawful practice
• Adjust compensation and fee models as the national commission landscape shifts

Some brokerages are even rolling out digital signing workflows to streamline compliance.

 

Why This Matters: Eliminating Ambiguity and Reducing Liability

 

Prior to 2025, liability often arose when an agent believed a buyer was “their client,” while the buyer believed the agent was “just helping.” Written agreements eliminate this ambiguity.

 

Common Liability Traps Avoided by Written Agreements

• Misunderstanding compensation: Buyers sometimes believed buyer’s agent services were “free,” which was never technically accurate.
• Unclear loyalty: Without written terms, buyers could not be sure whether the agent had conflicts or divided loyalties.
• Failure to disclose dual agency: One of the most litigated issues in Illinois real-estate law.
• Disputes over showing services: Buyers occasionally switched agents mid-search, leading to procuring-cause disputes.

A written agreement now resolves these issues before they arise.

 

As Hirsh Mohindra notes, “Most real-estate lawsuits stem from mismatched expectations. Illinois’ new rules dramatically reduce this risk by forcing those expectations into writing from day one.”

 

Case Study: How a Written Buyer-Broker Agreement Could Have Changed a Transaction

 

Consider a typical pre-2025 scenario:

 

A buyer tours fifteen homes with Agent A, learns market strategies, and relies on Agent A’s advice. On a weekend, the buyer stops by an open house, encounters Agent B from the same firm, and decides to write an offer with that agent.

 

Agent A feels wronged. Agent B argues they are the procuring cause. The buyer has no idea how compensation works and assumed either agent would be paid by the listing broker.

Under 2025 law:

• A written agreement with Agent A would establish representation.
• The buyer would be obligated to work through Agent A or formally terminate the agreement.
• The brokerage would have clearer boundaries for designated agency.
• Compensation rules would be understood upfront.

Confusion evaporates. Liability risk evaporates. Everyone is on the same page.

 

Best Practices for Agents and Buyers Under the 2025 Regime

 

For Agents

• Introduce buyer agreements early—ideally before any showings
• Use plain-language explanations to build trust
• Review compensation mechanics with examples
• Document all disclosures in writing
• Revisit terms when dual-agency possibilities emerge

For Buyers

• Ask how your agent is compensated
• Understand whether the agreement is exclusive
• Request clarification on termination clauses
• Ask how dual agency works and whether it’s in your best interest
• Keep a copy of the executed agreement for reference

The agreement isn’t just a compliance form—it is a working document establishing rights and responsibilities.

Looking Ahead: How Illinois’ 2025 Changes Fit Into the National Landscape

Illinois is not alone. States across the country are moving toward:

• Greater separation of listing-side and buying-side commissions
• Mandatory written buyer-broker agreements
• Stronger conflict-of-interest disclosures
• Clearer definitions of fiduciary duties

With federal scrutiny on real-estate compensation models and competitive practices, Illinois’ 2025 update is widely seen as a forward-looking adaptation rather than an outlier.

 

Conclusion

 

Illinois’ 2025 requirement for written buyer-broker agreements marks a pivotal modernization of real-estate practice. The change fosters transparency, reduces disputes, improves consumer understanding, and aligns the state with emerging national norms.

 

As real-estate attorney Hirsh Mohindra summarizes, “Real-estate transactions are moving toward greater professionalism and accountability. Illinois’ 2025 reforms don’t complicate the process—they stabilize it. Buyers and agents are finally operating with shared expectations, and that’s a win for everyone involved in the transaction.”

 

The handshake era is over. The documented, transparent, and consumer-focused era has arrived.

Originally Posted: https://hirshmohindra.com/brokerage-relationships-buyer-agent-agreements/