Real Estate Industry Changes

As a result of numerous class-action lawsuits, settlements and Department of Justice reviews, the real estate industry throughout the country is adopting numerous changes in procedures and forms beginning this month.   Every buyer and seller of residential real property will be affected by these changes.  Some of the most significant changes include:

For Buyers:

1.  When buyers begin working with a real estate agent, they will receive an advisory that outlines how brokers and agents can be compensated in a real estate transaction (Broker Compensation Advisory).
2. Every buyer will be required to have a “Buyer Representative Agreement” (BRA) with their real estate agent/broker prior to viewing available properties with that agent/broker.  The BRA forms will vary depending on the type of showing (Open House, limited # of properties, exclusive or non-exclusive, geographical limitations, etc.).  The forms will call for the buyer to compensate the real estate agent/broker with whom they decide to work subject to the ability to negotiate with the seller for the seller to pay the amount the buyer agrees to pay their agent/broker.
3. Compensation to an agent/broker representing a buyer will not be allowed to exceed the amount agreed upon in the BRA executed between the buyer and agent/broker even if the seller has expressed a willingness to pay more.

For Sellers:

1.  Potential sellers will receive an advisory when they agree to work with a real estate agent that outlines how brokers and agents can be compensated in a real estate transaction (Broker Compensation Advisory).
2. Listing agreements will no longer contain a reference to an amount being offered to a buyer’s agent/broker by the seller or a reference to the MLS (Multiple Listing Service).  The amount a seller might pay a buyer’s agent/broker will be negotiable depending on the offer received from a buyer.  There will be a separate Addendum to the listing agreement that contains MLS information.  
3. Sellers may indicate through the MLS that they will consider “concessions” as part of a sale.  These “concessions” may include credits to the buyer for closing costs, various property improvements and/or the fee, or a portion thereof, due a buyer’s agent/broker.   Listing agents may inform other agents and the public of the seller’s willingness to consider these concessions.  They many not reference a willingness to consider paying buyer agent/broker compensation in the MLS.
4. With the seller’s advance approval, the seller’s agent/broker may offer a portion of their compensation to the buyer and/or buyer’s agent/broker as part of the transaction negotiations.
5. A seller may offer their agent/broker additional compensation in the event their agent/broker (with seller’s full approval) represents a buyer of the property who is unrepresented.   

Like the changes and new procedures that the industry adopted during the COVID years, and during other industry transition periods, agents, brokers and their clients will adapt quickly to these new procedures and forms.   Agents and brokers will get on with the business of assisting our clients with transitions in their lives that involve where and how they live and work.

Please contact me if you have any questions about these or other industry matters.   Gerrett Snedaker, Broker, Reserve Properties, 415-269-5809 gsned@winecountrygroup.com