Understanding Written Buyer Agreements: Enhancing Clarity and Transparency for HomebuyersAs a homebuyer, having a clear understanding of the services your real estate agent provides and how they are compensated is crucial. Starting August 17, 2024, new policy changes will require real estate professionals to enter into written buyer agreements with buyers before touring any homes. This agreement, whether for in-person or virtual tours, ensures transparency and sets clear expectations for both parties.Here’s a breakdown of what these written buyer agreements will entail and why they matter to you as a homebuyer.Key Benefits of Written Buyer AgreementsWritten buyer agreements are designed to benefit you by clearly outlining the services your real estate agent will provide and detailing how they will be compensated. These agreements help to avoid misunderstandings and ensure that both you and your agent are on the same page from the start.Mandatory Provisions for Buyer AgreementsAccording to the new policy changes, written buyer agreements must include the following mandatory provisions: - Clear Disclosure of Compensation: - The agreement must specify and clearly disclose the amount or rate of any compensation the real estate professional will receive from any source, or how this amount will be determined. - The compensation amount must be objectively ascertainable and not open-ended (e.g., “buyer broker compensation shall be whatever amount the seller is offering”). - It must include a statement that real estate professionals may not receive compensation from any source exceeding the amount or rate agreed upon with the buyer. - The agreement must clearly state that broker commissions are not set by law and are fully negotiable. - It must include any provisions required by law.Additional Considerations for Buyer AgreementsWhile not mandated by the new policy, here are some additional considerations and provisions that can enhance your buyer agreement: -Format and Clarity: - Agreements should be well-organized, written in understandable terms, and use a clear, readable font size. - Avoid pre-filling key terms like the length of the agreement and compensation without legal advice. -Types of Representation: - Consider all types of written buyer agreements permitted by state law, including short form, limited service, agency, non-agency, transactional, and customer agreements. -Broker Services: - Clearly articulate the services the real estate professional will provide to you as the buyer. -Consumer Protection: - Disclose all contractual obligations of the buyer, duties of confidentiality owed to the buyer, and the Equal Housing Opportunity statement. - Include warnings about wire fraud and the possibility of video and audio recording by sellers during home tours. - Inform clients that you provide real estate brokerage services and advise them to seek appropriate professional services from inspectors, lenders, attorneys, tax advisors, and title agents. -Term and Termination: - Negotiate and agree on the duration of the agreement, including whether it extends automatically until closing upon purchase contract ratification. - Include provisions addressing termination with and without cause by both the buyer and the real estate professional. - Address whether a carryover period applies if the buyer terminates the agreement and subsequently executes a purchase agreement within an agreed period. -Compensation and Fees: - Agree on a retainer fee and specify whether it is included in total compensation, credited against compensation, and/or refundable. -Conflicts of Interest: - Address how potential conflicts of interest will be resolved, including disclosure and consent for representing other buyers submitting offers on the same property, dual agency, designated agency, or transaction brokerage. -Dispute Resolution: - Include mandatory or optional alternative dispute resolution methods, such as mediation or arbitration. Parties may also agree to waive trial by jury and class actions in the event of litigation related to the agreement.Policy LimitationsThe new policy will not dictate: - The type of relationship you have with the real estate professional (e.g., agency, non-agency, exclusive, non-exclusive, subagency, transactional, customer). - The term of the agreement (e.g., one day, one month, one house, one zip code). - The services to be provided (e.g., ministerial acts, a certain number of showings, negotiations, presenting offers). - The type or amount of compensation charged (e.g., $0, flat fee, percentage, hourly rate).For expert guidance and personalized assistance in real estate, reach out to Irina and Jeff Shoket. We are dedicated to helping you achieve your real estate goals with confidence and making the experience rewarding. Contact us today!Phone: (805) 267-9171Email: [email protected] look forward to assisting you with all your real estate needs in Thousand Oaks and beyond. 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