In a recent development, NAR announced significant changes to the buyer's agreement, set to take effect on August 17th instead of July. These changes are part of a $418 million settlement, with final approval scheduled for November 26th.
Here, Brendan Brown, a distinguished luxury real estate agent in Los Angeles, addresses common questions surrounding these updates and clarifies what MLSs and agents can and cannot do under the new rules.
When is a Buyer Agreement Required?
NAR has clarified the definition of "working with" a buyer. Agents can promote their services to buyers and communicate on behalf of sellers, such as answering questions at open houses, without requiring a formal agreement. Typically, if an agent does not offer specific services or anticipate payment, a buyer agreement is not mandatory.
However, certain activities like home tours or showings necessitate a written contract. Examples include Zillow's new "touring agreement," compliant with the updated regulations.
NAR further specifies that while buyer agreements are mandatory, MLSs and brokerages have flexibility in negotiating terms like agreement duration, number of showings, and services offered, as long as they comply with state laws.
Compensation for Buyer Agents
Regarding compensation, NAR emphasizes that it must be "objectively ascertainable" and not indefinite. Agents and buyers can agree on a fixed amount, a percentage, or an hourly rate. For instance, an hourly rate can specify the hours worked rather than the exact compensation amount, meeting the requirement of objectivity.
NAR also prohibits clauses like "buyer broker compensation shall be whatever amount the seller offers to the buyer," ensuring clarity in payment terms.
Agents Already Using Buyer Agreements
While mandatory in 18 states, buyer agreements are not new to many agents. However, existing agreements must be updated to comply with the new regulations by August 17th. Any references to indefinite compensation or MLS-offered compensation must be revised.
Agents with existing agreements continuing to work with buyers after August may need to amend or have buyers sign new agreements to ensure compliance.
For further details, refer to NAR’s updated FAQ, and this resource to learn more about the changes.to understand these changes better.
