After many months of speculation and fallout from the NAR (National Association of Realtors) Settlement with a class action lawsuit, August has finally arrived. When news first broke about the proposed terms and changes, there was a lot of panic throughout the industry, but after really processing the thoughts and creating new forms, there is also opportunity and improvements.
1) Buyers must now have a written employment agreement in place to view available properties.
This does not only apply to buying… but renting homes as well. We have two new/updated forms for this purpose here in Arizona. Fortunately for all of us, the Arizona Association of Realtors creates standardized forms that everyone can use. This helps to protect the consumer and make it easy for professionals to understand the forms their clients are utilizing.
For us, we still like to schedule a pre-move consultation in the office, if at all possible, to sit down with a perspective Buyer. This allows us to dive into their goals, timelines, discuss market conditions, processes and build the right game plan. This is what true professionals have already been doing.
2) Compensation being offered by a Seller/Listing Broker is no longer allowed to be advertised in the MLS (Multiple Listing Service).
One common misconception is that Sellers can no longer compensate the Buyer-Broker, but that is just not accurate. The communication of this amount is what’s changed. Now, we have a specific form to use (CABB – Compensation Agreement Between Brokers), which is ideally issued by the Listing Agent/Broker and sent to the Buyer-Broker when they first call to confirm availability prior to showing.
If the Seller/Listing Broker is not automatically offering a compensation amount upfront, it can still be negotiated through the offer process with an SCA form (Seller Compensation Addendum).
If you’re selling a property, we will go over the potential pros and cons of offering different types of compensation, or not. Market conditions will also play a role in the final recommendation. The Buyer-Broker can be paid by the Seller, Listing Broker and/or the Buyer… or a combination of up to all three.
MYTHS:
- A Buyer choosing to be “unrepresented” in a transaction will save money. Incorrect. The listing agent actually negotiates for an additional fee within the listing contract should a buyer choose to be unrepresented in a purchase. There are a lot of reasons why a Buyer should not be unrepresented and Dual Agency certainly offers more guidance, explanation and protection for the purchaser.
- You cannot visit an Open House any longer without a written agreement. This is not true. The listing agent holding the home “open” is working on behalf of their client, the seller, and therefore can allow you to tour. However, if you wish to see another home down the street, then you would need to sign a form entering into an agreement for services. If you’ve already entered into a Buyer-Broker Exclusive Employment Agreement, then you would want your hired agent to show you any properties, be they resale or new construction. Otherwise you could find yourself owing an additional amount.
Inevitably there will be a transition period to see what ‘best practices’ turn out to be and how Buyers/Sellers ultimately react to the new process. Personally, I think it will be much more of a process change than actual numbers change. For many would be buyers, they don’t have the additional funds necessary to hire their own representation, but at the end of the day, still find value and therefore want to be represented. This means the seller would need to offer some compensation to strike a deal with that buyer.
It may sound complicated, but that’s why we’re here to explain and guide throughout the process of Buying, Selling or Leasing Real Estate.
One thing I do believe (or hope) is that many who don’t take this business as seriously and/or are part-timers will exit the industry due to the additional workload we are undertaking. There is a lot that goes into running a Real Estate business, which most don’t get to see; the good ones are able to hide that part and make the consumer experience a positive one.