Industry watchdog the Consumer Federation of America says the buyer’s agreement you’re relying on is woefully inadequate to properly protect homebuyers.
The time has come – the time to take charge. This summer, July 30-August, at Inman Connect Las Vegas. On January 1, 2024, experience the complete reinvention of the most important event in real estate. Join your peers and the best in the industry to shape the future. learn more.
Each week on Download, Inman’s Christy Murdoch goes deeper into the week’s hottest stories to give you the information you need to face Monday. This week: Industry watchdog the Consumer Federation of America says the buyer’s agreements you rely on are woefully inadequate to properly protect homebuyers.
Real estate agents are bound by their professional ethics and state-specific legal obligations to provide fiduciary-level services to their clients. Although we don’t talk about it often, we assume this higher level of service when we talk about the way we treat our customers.
The central argument in the commission lawsuit is that the current commission structure fails to properly serve customers, whether they are sellers or buyers. So, how much of this perception is real, and how much is perception? What does this say about the way agents provide fiduciary-level services?
Bonus: Everything an attorney should know about fiduciary duties
One of the ways a buyer’s agent seeks to protect themselves and their commission is by enforcing an existing buyer’s agreement. In some markets, these have always existed but are not commonly used. In other markets and at some brokerages, it’s business as usual.
However, these buyer agreements may not be enough to protect you or help you protect your customers, according to industry watchdog the Consumer Federation of America (CFA). The group described many of the contracts it analyzed as having questionable language and practices and advised buyers to be careful before signing on the dotted line.
A Consumer Federation of America report, “Required Buyer Agency Contracts: Impact on Home Buyers,” examined 43 contracts from 37 states, the majority of which were issued by state or local associations of REALTORS®. The CFA found “unfair practices” in the contracts, advised homebuyers to take precautions before signing and invited the regulator to review the language in the contracts.
“As buyer contracts are used more frequently, buyers are likely to place more demands on these contracts, and more agents and their brokers may be more flexible in agreeing to client requests,” the report states.
“Should a buyer work with a buyer’s agent without a contract? It may be wiser to work directly with a dual agent or the listing agent with a trading broker, but also hire an attorney to protect your interests.”
Extra: Redfin takes center stage in new lawsuit targeting buyer’s broker commissions
So, how do you make sure your buyer agreement passes the smell test? Look at it from the perspective of your fiduciary responsibility and make sure you explain it thoroughly to your buyer clients. Transparency is your friend at this point and a powerful way to differentiate yourself from agents who may be erratic in their buyer service and communication.
Here are some of the latest stories from Inman contributors who are working with hopeful homebuyers in the field and navigating the new normal of buyer representation.
A Basic Guide to Commissions for New Agents
Author and trainer Bernice Ross Provides a rundown of what you need to know, what’s most likely to change, how it will impact your wallet, and steps you can take to prepare for the future.
9 questions we still don’t have answers to after Cece
Brokers, change always brings chaos and disruption Amir’s way wrote. While many of these issues have been lurking in the background, they illustrate the work that still needs to be done.
Objection Handling Script for Buyer Representative
If you are rethinking buyer inquiries and implementing a buyer representation agreement, Team Leader Carl Medford Share what you need to know to explain the changes to your customers.
Extra: Stop!Before sending a buyer’s list, ask these 47 questions
Christy Murdock is a freelance writer, coach, and consultant, and write about real estate.Contact Writing Real Estate Instagram and subscribe to the weekly roundup, ketchupin the newsletter or podcast form.
