Texas Agents Must Disclose Exact Compensation Before Showing Any Property
Since August 17, 2024, the NAR settlement has required every buyer's agent to execute a written buyer representation agreement before showing any property. In Texas, this obligation is now codified in state law under TRELA Section 1101.563 (SB 1968), effective January 1, 2026. The compensation disclosure inside that agreement isn't optional boilerplate — it's a compliance requirement with teeth. TREC fines start at $1,000 per violation, and repeated failures can trigger license suspension.
This article gives you the exact language frameworks, clause-by-clause requirements, and practical steps to make your compensation disclosures bulletproof in every Texas buyer representation form.
The Four Mandatory Compensation Clauses Under the NAR Settlement
The NAR settlement imposes four specific requirements on the compensation disclosure in every buyer representation agreement. Texas agents must satisfy all four regardless of which TXR form they use.
1. Exact Compensation Amount
Your agreement must state a specific, numerical compensation amount. Vague language like "customary commission" or "standard rate" fails this requirement. You must express compensation as a fixed dollar amount, a specific percentage of the purchase price, or a combination of both. For example: "Buyer agrees to pay Agent compensation of 2.5% of the final purchase price, or $8,000, whichever is greater."
2. Source Neutrality
The agreement must not mandate that compensation come exclusively from the seller. Your disclosure should make clear that the buyer is ultimately responsible for the agreed-upon compensation, regardless of who funds it. Acceptable language: "Buyer is responsible for Agent's compensation. This obligation may be satisfied in whole or in part by seller concessions, listing broker cooperation, or direct payment by Buyer."
3. Negotiability Disclosure in Conspicuous Text
This is where many agents get tripped up. The agreement must include a statement — in conspicuous text such as bold, uppercase, or a larger font — that compensation is not set by law and is fully negotiable. The NAR settlement and NAR Code of Ethics Article 7 (2026 amendment) both require this written disclosure before any representation begins. Example: "NOTICE: THE COMPENSATION STATED IN THIS AGREEMENT IS NOT FIXED BY LAW. IT IS NEGOTIABLE BETWEEN BUYER AND AGENT."
4. Specific Services Listed
You cannot collect compensation for undefined work. The agreement must list the specific services you will provide in exchange for the disclosed compensation. This includes property searches, showing coordination, offer preparation, negotiation, and closing assistance. Generic phrases like "all customary services" are insufficient — itemize what you are being paid to do.
Which TXR Form You Use Determines Your Disclosure Obligations
Texas offers three standard buyer representation forms from the Texas Realtors (TXR), and each one carries different compensation disclosure requirements tied to its scope.
TXR 1501 — Full Representation Agreement
TXR 1501 is an exclusive, full fiduciary duty agreement with no statutory term limit. Because this form creates the broadest obligation, your compensation disclosure must be the most detailed. State the exact compensation, list every service you will perform, include the conspicuous negotiability notice, and address source neutrality. This is the form most Texas agents use for serious buyers engaged in an active search.
TXR 1507 — One Property or One Day Agreement
TXR 1507 limits representation to either one specific property or one calendar day. Even with this narrow scope, all four NAR settlement compensation clauses still apply. The compensation amount should reflect the limited engagement — for example, a flat fee for a single showing and offer preparation. Do not copy your TXR 1501 compensation language verbatim into a 1507 without adjusting the services list to match the reduced scope.
TXR 1508 — Showing Only Agreement
TXR 1508 is a non-exclusive agreement with a maximum term of 14 days under TRELA Section 1101.562. This form provides no representation or advice — only physical access to a property. Your compensation disclosure must still state an exact amount and include the negotiability notice. However, the services list will be minimal: property access coordination and physical showing only. Make clear in writing that you are not providing negotiation, offer preparation, or fiduciary advice under this form.
How MLS Rules Affect Your Compensation Disclosure
Under the NAR settlement, MLS rules now prohibit offers of buyer agent compensation on MLS listings. This means you can no longer rely on seeing a co-op commission in the MLS and backing into your compensation disclosure. Your buyer agreement must stand on its own as the definitive source of your compensation terms.
If a seller later offers to contribute to buyer agent compensation through a separate concession, that contribution offsets the buyer's obligation — it does not replace your disclosure. Document any seller concession separately and reconcile it against the compensation stated in your buyer agreement at closing.
The Texas Statute of Frauds Backstop
Even if the NAR settlement didn't exist, TRELA Section 1101.806 (the Texas Statute of Frauds for real estate) requires that all real estate agreements be in writing to be enforceable. A verbal promise from a buyer to pay your commission is worthless in a Texas courtroom. If you don't have a signed, written compensation disclosure in a properly executed buyer representation agreement, you have no legal right to collect.
This also applies to electronic signatures. Under the ESIGN Act (15 U.S.C. § 7001), electronic signatures carry the same legal validity as handwritten signatures, provided the signer has agreed to conduct business electronically. Digital execution of your TXR forms is legally valid — but only if you can prove the buyer consented to electronic execution before signing.
Five Steps to a Compliant Compensation Disclosure
- Choose the correct TXR form (1501, 1507, or 1508) based on the scope of engagement before any showing.
- State the exact compensation as a fixed dollar amount, a percentage, or both — never use vague language.
- Include the conspicuous negotiability notice in bold or uppercase text within the agreement.
- Itemize every service you will provide in exchange for the stated compensation, matched to the form's scope.
- Obtain the buyer's signature (handwritten or electronic under the ESIGN Act) before showing any property.
Common Mistakes That Trigger TREC Enforcement
Using a range instead of an exact amount. Writing "2%–3%" is not a specific number. TREC expects a single, definite figure. If you want flexibility, use a fixed percentage with a minimum dollar floor.
Forgetting the negotiability disclosure. Even if you verbally told the buyer your commission is negotiable, the written conspicuous notice must appear in the agreement itself. Verbal disclosures do not satisfy the NAR settlement or NAR Code of Ethics Article 7.
Exceeding the 14-day cap on TXR 1508. If your Showing Only agreement runs longer than 14 days, it violates TRELA Section 1101.562. Execute a new 1508 or transition the buyer to a TXR 1501 or 1507.
Failing to reconcile seller concessions. If a seller contributes $5,000 toward your compensation but your buyer agreement states $8,000, you must clearly document that the buyer owes the $3,000 difference. Ambiguity here creates disputes and potential TREC complaints.
Protect Your License and Your Commission
The compensation disclosure is the single most scrutinized clause in any Texas buyer representation agreement right now. TREC is actively auditing compliance with SB 1968, and the NAR settlement's monitoring provisions add a federal layer of oversight. Getting this right isn't about legal theory — it's about keeping your license active and your commissions enforceable.
Auraxio's compliance tools generate state-specific compensation disclosure language that satisfies all four NAR settlement clauses and TRELA requirements. If you're building your buyer agreements manually, audit every single one against the checklist above before your next showing.