Mandatory buyer-broker agreements went into effect on August 17th. If you are on the market for a house, below are some questions you should be asking, and the answers provided by National Organization of Realtors.
As a buyer, am I required to sign an agreement before speaking with an agent?
No. Signed document is not required to speak with an agent; to outline your intentions or requirements; to ask about market conditions. In fact, interviewing your agent is essential before hiring one, especially now that you may be liable for commissions. Interviewing an agent does not require signing a form.
When do I have to sign an agreement?
A signed buyer-broker agreement is required before touring a house. That includes virtual tours.
Am I, as a buyer, obligated to pay my agent’s commissions?
Not necessarily. In most cases, the seller will still be compensating both agents. However, this is no longer standard practice. If a seller of the property you picked has not agreed to compensate your agent, or not compensate them the full amount your agent requires, you are obligated to pay all or part of your agent’s commission. Buyers’ agents don’t work for free. The amount of compensation your agent gets must be explicitly stated in the buyer-broker agreement.
What if I am not ready to buy a home, and I just want to see what’s on the market? What if I change my mind about buying? Do I still have to pay my agent?
There are different types of buyer-broker agreement forms. Unless you are sure that you are ready to hire an agent, we recommend that you sign a “touring agreement” form. This form does not call for exclusive representation, or binds you to a commission. It simply allows your agent to show you a home. Ask for a “touring agreement” form, and make sure that it explicitly states that you are not obligated to pay your agent unless a different, “exclusive representation” agreement, is signed.
What are “touring agreement” forms?
Signing this form allows your agent to show you homes, but it does not bind you to a particular agent, or obligates you to pay a commission. Touring agreement form may state a limited number of showings, or have an expiration date. This time frame gives you a chance to use your agent’s time to see some homes and determine if you are ready to move forward working with that agent.
How is “exclusive representation” agreement different from a “touring agreement?”
Once “exclusive representation” form is signed, your agent is entitled to a compensation for their time and services. You may not use another agent to complete your transaction, and if you do, you are still obligated to pay your agent unless they are getting compensated by other means. Depending on what is stated in your agreement, your agent may be entitled to a compensation even if your transaction falls through, or you want to pull out of the agreement. Before signing “exclusive representation” agreement, read it carefully and make sure you understand all the terms of it. Do not sign anything you don’t understand.
What if I don’t want to sign any forms?
Some type of a buyer-broker agreement is mandatory while working with an agent. An agent is not legally allowed to show you a home unless you sign an agreement. Working with a buyer without a written agreement would put an agent and their broker in legal jeopardy. Please don’t pressure a real estate professional by insisting that they show you a home without a signed agreement.
Am I allowed to buy a home without an agent?
Yes, you are still allowed to represent yourself, as you were before the changes went into effect. However, if you are not familiar with real estate law or negotiations process, this may cost you more than an agent’s commission. A good agent is there to negotiate a better price; to point out the detriments of a particular home that may prove costly; to negotiate credits after inspection. Not every transaction goes smoothly – a good agent is there to protect your interests and make the transaction is stress-free. An agent can help you secure financing; schedule inspections; recommend a home repair specialist. An assistance of a real estate agent or a legal professional is always recommended in a real estate transaction.
Any change in decades-long practice causes much commotion in any industry. However, despite what you hear, this change is very unlikely to produce any Earth shuttering changes in the way real estate transactions are conducted. It will take some adjustment for the buyers who are now required to sign an agreement with their agents, but they will soon learn that all terms are dictated by the market and are always negotiable.
If you are interested in any of the properties we are selling, please be advised that Satinleaf Properties will be covering your agent’s 2.5% compensation. As a buyer, hiring an agent when working with us will not cost you money.
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