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avigating the Maze of Buyer Agreements

    Lesley Muchow, NAR's general counsel, recently shed light on buyer agreement requirements, dispelling common misconceptions and clarifying key points. In a recent conversation with Real Estate Insiders Unfiltered, Muchow broke down the essentials, highlighting do's and don'ts for agents.

    A written buyer agreement is always required before an agent can show a home, but state laws may supersede NAR's requirements if they dictate earlier or later signing times. For instance, Colorado has pushed back on NAR's requirement, emphasizing the importance of understanding local regulations.

    Virtual tours count as in-person tours, triggering the settlement practice change, unless no one enters the property. In such cases, agents are still bound by other rules, including the Code of Ethics and state laws.

    The buyer agreement must include specific compensation details, which must be "objectively ascertainable" – meaning a reasonable person can understand what they're agreeing to pay. This includes disclosing the amount or rate of compensation, as well as stating that it's negotiable and not set by law.

    Before signing, agents should also discuss cooperation, compensation, dual agency, and confidentiality with buyers, using the initial conversation to map out their engagement scope. New construction referrals don't require a buyer agreement, but existing home sales do.

    While NAR's website advises against entering multiple agreements for the same services, Muchow allows it in scenarios where services differ between traditional sellers and builders. Agents can also create one buyer agreement with specific compensation details for new homes or existing properties.

    Touring agreements are allowed as long as they include required compensation provisions. Agents can put $0 for compensation in a touring agreement, but if the scope of services changes, a new agreement may be necessary. However, Muchow warns that offering free touring services comes with risks, such as investing time only to have the buyer choose another agent.

    Muchow's guidance offers clarity on buyer agreements, emphasizing the importance of understanding NAR requirements and local regulations. By navigating these complexities, agents can better serve their clients and stay compliant with industry standards.