Real Estate Industry Changes in 2024

We’ve experienced some pretty big real estate industry changes in 2024.  As of August 13, 2024, real estate agents in Austin will require potential buyers to sign a Buyer Representation Agreement before touring a home. It’s essential to read and understand any written agreement you enter into with a real estate professional.

Background on Recent Developments:

Recently, the National Association of REALTORS® (NAR), the largest real estate trade organization in the U.S., has been in the news due to antitrust lawsuits and a proposed settlement. This settlement includes new requirements for real estate agents, particularly those using the Multiple Listing Service (MLS).

Starting mid-August, NAR mandates that agents obtain signed agreements from buyers prior to any home tours. This change impacts a significant number of licensees involved in residential real estate across the country.

What You Should Know:

If an agent asks you to sign a Buyer Representation Agreement before viewing a home, consider the following:

1. You Have Options: Texas law allows you to sign a Showing Services Agreement instead, giving you time to evaluate the agent before committing to a Buyer Representation Agreement.
2. Discuss Representation: Understand the type of representation the agent offers. Will they be solely representing your interests, and what does that entail for you?
3. Exclusivity of the Agreement: Most Buyer Representation Agreements are exclusive, meaning you will work with that agent alone. Clarify this point with your agent.
4. Term Length: Determine how long the agreement lasts and whether its duration is negotiable.
5. Cancellation Terms: Know who can terminate the agreement and under what conditions. Can you cancel if you feel your agent is not meeting your needs?
6. Compensation Details: Ask about the services the agent must provide to earn their compensation and how much that compensation will be.
7. Read and Understand: Ensure that you fully comprehend and accept the terms outlined in the agreement before signing.

Implications of Existing Agreements:

If you have already signed a Buyer Representation Agreement, be aware that it likely involves compensation. Signing another agreement with a different agent may leave you contractually obligated to pay multiple agents, so proceed with caution.

Importantly, these agreements do not diminish the fiduciary duties owed to you by your agent. If you believe you’ve been harmed by an agent’s actions, you have rights that must be respected.

What Does This Mean for You?

• Mandatory Agreements: Starting August 17, 2024, written Buyer Representation Agreements are required for most real estate transactions nationwide, a change stemming from the NAR settlement concerning broker commissions.
• Negotiability: You can negotiate the terms of these agreements, including the services provided and compensation structure. Make sure the final agreement reflects your understanding with your agent.
• Upfront Discussion: The conversation about compensation should happen early in your discussions with your agent, ideally right after addressing agency representation.
• Pressure Tactics: Be cautious if you feel rushed to sign an agreement. Avoid agreements that are hard to understand or seem overly favorable to one party.
• Not a State Requirement: In Texas, signing an agreement to view a home is not mandatory. You should feel comfortable and informed before making any commitments.

Moving Forward: What to Expect

• For Buyers: You will need to sign a Buyer Representation Agreement before viewing properties (except open houses). Be prepared to discuss your agent’s compensation and negotiate if necessary.
• For Sellers: You still have the option to offer buyer-agent compensation but must navigate new limitations on how to market these offers.
• For Agents: Expect more documentation and a higher demand for transparency. Listing agents will face challenges in marketing competitive offers, while buyer agents will need to conduct thorough research to advise clients effectively.

These changes underscore the importance of understanding your rights and responsibilities as a buyer in the real estate market. Always ensure you are comfortable with the agreements you sign and do not hesitate to ask questions to clarify any terms. The evolving landscape of real estate in Austin requires buyers to be proactive and well-informed.

If you would like to read more about the changes, click here or reach out to me and I will be happy to have a one-on-one conversation with you.