Written services agreement

Key Takeaways

• A Washington firm cannot receive compensation for brokerage services from any party or firm unless it has a services agreement containing the required compensation terms (RCW 18.86.080(7)).
• Required compensation terms include the amount the principal agrees to pay the firm, the principal's consent to the firm sharing compensation with another firm, and the principal's consent to the firm being paid by more than one party.
• A buyer's services agreement must state whether the appointed broker agrees to show properties when no party or firm has offered to compensate the firm.
• Paying a firm's compensation does not by itself create an agency relationship with the payer (RCW 18.86.080(2)).

What It Means

A written services agreement is the contract Washington law requires between a real estate firm and its principal, and it is what turns brokerage work into a paid engagement. RCW 18.86.010 defines a services agreement as a written agreement between a real estate firm and principal that appoints a broker to represent the principal as an agent and sets forth the terms required by RCW 18.86.020 and RCW 18.86.080.

That definition points at two statutes, and the agreement does two jobs to match. RCW 18.86.020 supplies the representation terms: how long the agreement runs, which broker is appointed, whether the relationship is exclusive or nonexclusive, and whether the client consents to Dual Agency in its Washington form. RCW 18.86.080 supplies the money terms: how much the firm is paid, and who is allowed to pay it.

None of this is optional paperwork. Without the written agreement, a Washington firm has no statutory route to a commission, no matter how much work its broker put in.

How It Works in Washington

The compensation rule is the sharp edge. Under RCW 18.86.080(7), to receive compensation for rendering real estate brokerage services from any party or firm, a firm must have a services agreement stating the amount the principal agrees to compensate the firm, the principal's consent to the firm sharing compensation with another firm, and the principal's consent to compensation by more than one party. A buyer's agreement must also state whether the appointed broker agrees to show properties if no party or firm has offered to pay the firm.

Two Washington rules cut against common assumptions. RCW 18.86.080(2) provides that an agreement to pay or the payment of compensation does not establish an agency relationship between the party who paid and the broker, so a seller who funds the buyer's firm does not become that firm's client. RCW 18.86.080(6) provides that a firm may be compensated based on the purchase price without breaching any duty to the buyer or seller. Written Compensation Disclosure is separately required by RCW 18.86.030(1)(g).

Example

Harborview Realty signs a written services agreement with seller Ana on April 1. The agreement sets Harborview's compensation at 3 percent of the sale price and records Ana's consent to Harborview sharing part of that amount with the buyer's firm. Ana's home sells for $610,000.

Harborview's compensation is 3 percent of $610,000, or $18,300. Under the sharing consent, Harborview pays $9,150 to the buyer's firm, Sound Property Group, and keeps $9,150. Sound Property Group can accept that share because its own written agreement with the buyer states the amount the buyer agreed to pay and consents to the firm being compensated by another party. Had Sound Property Group skipped that paperwork, RCW 18.86.080(7) would leave it with no statutory claim to the $9,150, even though its broker wrote the winning offer. Since the 2024 Nar Settlement, an offer of compensation is no longer published on the MLS, so the written agreement is where these numbers now live.

Common Mistakes and Exam Traps

• Compensation does not create agency. A seller who pays the buyer's firm is still not that firm's client, under RCW 18.86.080(2).
• The services agreement is the gate to being paid at all in Washington, not merely a record of an agreed fee. Without one, RCW 18.86.080(7) blocks the firm's claim to compensation.
• Charging a percentage of the purchase price is expressly permitted and is not a breach of duty to the buyer or the seller, under RCW 18.86.080(6).
• A firm may lawfully be compensated by more than one party in the same transaction, but only when the principal consented to that in the services agreement.