BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
The following are additional questions received by clients regarding handling transactions in the post-NAR settlement era.
Question: I am a listing agent. If an offer is received with a buyer requesting that the buyer’s agent’s compensation be paid by the seller, even if the seller says they do not want to pay the buyer’s agent’s commission, do we still have a legal obligation to present the offer?
Answer: Yes. Unless a seller instructs you in writing not to present certain offers, you are legally and ethically obligated to present all offers to a seller. Even if a seller has advised you that the seller does not want to receive offers wherein a buyer requests that the buyer’s agent be compensated, it is recommended that a listing agent advise the seller of the receipt of the offer in writing. If the seller chooses not to review or respond to it, that is within the seller’s discretion.
Question: If the seller advises me in writing that the seller does not want to receive offers submitted by unrepresented buyers, am I still obligated to advise the seller if such an offer is received?
Answer: As indicated above, if a seller instructs you in writing not to present certain offers, you are not legally obligated to do so. However, it is a best practice and is recommended that you advise the seller that such offers were received, giving the seller the opportunity to review them.
Question: Regardless of who pays the buyer’s agent, does the final closing statement need to show how the buyer’s commission was paid?
Answer: Yes. The final closing statement needs to accurately reflect who paid what commissions.
Question: What is the correct verbiage to use when a buyer’s agent calls a listing agent and inquires as to whether the seller is willing to pay the buyer’s agent’s compensation and/or buyer concessions?
Answer: It is recommended that at the time of taking the listing, a listing agent have a discussion with the seller as to whether the seller is interested and/or willing to pay a buyer’s agent and/or buyer’s concessions. If the seller indicates that the seller is willing to consider paying a buyer’s agent and/or buyer’s concessions, it is recommended that agents use the BRM “Seller Authorization for a Seller’s Broker to Offer Compensation to a Buyer’s Broker’s and Concessions to Buyer” form. Once that authorization form is signed, if a buyer’s agent calls and inquires as to whether a seller is willing to pay a buyer’s agent and/or buyer concessions, the response should be as follows, “The seller is willing to consider paying a buyer’s agent up to __% and/or buyer concessions, depending on the receipt of an acceptable offer, which is within the seller’s sole discretion.”
Question: Can a brokerage have a policy to refuse to work with unrepresented buyers?
Answer: Yes, but with conditions. If a brokerage chooses not to work with unrepresented buyers, the brokerage needs to disclose that fact to a seller in writing prior to taking a listing. The listing agreement should specifically reiterate that the brokerage does not work with unrepresented buyers, so the seller understands, authorizes, and approves this policy.
Question: What documentation do I use if a seller refuses to review offers from unrepresented buyers?
Answer: Add an addendum to the listing agreement or under Other Terms the following, “Seller instructs listing agent to advise buyers that any offers submitted by unrepresented buyers are not to be presented to the seller.” However, as indicated above, it is recommended that if you receive an offer from an unrepresented buyer, you notify the seller of that fact.
Question: If listing agent receives an offer prepared by an attorney for the buyer, is the buyer considered unrepresented? Attorneys generally will not do all the work the agents do in connection with disclosures and inspections. If so, how is an attorney paid?
Answer: If an offer is written by an attorney who is not a licensed real estate agent, you need to advise the seller of that fact and the seller needs to choose how to move forward. You should advise the seller that an attorney will likely understand the documentation, but the attorney will generally not handle or participate in the inspection process. In addition, unless an attorney is a licensed real estate broker, the attorney cannot accept a commission. However, the attorney can charge the buyer for the attorney’s time. The buyer, in turn, can ask that the seller pay for the attorney’s time as a buyer expense.
Question: If an unrepresented buyer refuses to sign BRM’s “Counteroffer to Unrepresented Buyer Offer,” how should we handle the situation?
Answer: If a buyer refuses to sign the Counteroffer to Unrepresented Buyer Offer, you should discuss that fact with the seller. The seller will need to decide whether to move forward with accepting the buyer’s offer or reject it. You should consider pointing out to the seller that the Counteroffer to Unrepresented Buyer Offer contains a release of liability and a reiteration of the buyer’s obligations regarding inspections and disclosures. If the seller has further questions regarding the risk of working with an unrepresented buyer, you can refer the seller in writing to a qualified California real estate attorney.
Question: Can I preview a property (buyer not present) on behalf of a buyer that does not have a buyer agreement with me? And if so, can I take photographs and send them to the buyer?
Answer: Yes, you can preview a property for a buyer when the buyer is not present even if you do not have a buyer representation agreement, and you can send photographs. The NAR Settlement Agreement only requires that if agents are working with a buyer AND are touring or showing properties to a buyer, agents must have a buyer representation agreement prior to that showing. “Touring” and “showing” are defined as when the agent enters a home with the buyer, or provides “a live, virtual tour to a buyer not physically present.”
Question: Can I add the requirement that a buyer sign a sign-in sheet in the Multiple Listing Service?
Answer: Yes, but only if you have the seller’s written permission before doing so.
Question: If a seller has given a listing agent permission to require buyers to sign-in, can we put a rider on our open house sign that a buyer must sign-in to see the property?
Answer: Yes, but a seller needs to approve that language in writing.
Question: How do we handle referrals ensuring transparency?
Answer: Use BRM’s referral agreement form which has signature lines for the referred party or parties to sign acknowledging that the referral fee is being paid.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices