FAQ #7
No. While the broker does need a written agreement in order to take buyers out to see a property, it is not a comprehensive buyer representation agreement.
This new practice under the NAR Settlement is something not required in the past. It will be a major change in selling real estate to require a prospective buyer to commit to signing a “touring agreement.”
The written agreement must clearly state in readily ascertainable terms how much compensation the buyer broker is going to request from the buyer.
2 Responses
There are so many things to explore here. First thing agents need to do is check with their broker.
A written agreement can be:
Non exclusive or exclusive
For a short period of time or a longer period of time
With compensation requested of the buyer, seller, or both as a percentage of the purchase price or a dollar amount.
Compensation by the hour or as a Menu of Services
An agency or a customer relationship
But, you must have a written contract delineating your compensation before you can take that buyer out to look at property.
The better you know the buyer, and the better you are at articulating your value proposition, the more of a commitment you can ask of the buyer…commitment in time and/or money.
Remember, in the past, you typically showed property without a contract with the buyer, and with no guarantee of compensation. If you are working with a person new to you, you may ask for a one afternoon agreement with $0 (zero) compensation…a contract that “Expires” in a few hours. You will not be held to a commission amount in a previously expired contract. Initially, short term buyer broker contracts may be better than longer term contracts thereby giving you time to build rapport with a buyer and build trust and confidence so you can more easily ask for a monetary commitment from the buyer, on the next or subsequent showings, should that be the path you take.
Of course you can also have the buyer request in the Offer that the seller pay you, the buyer broker, from the proceeds of the purchase.
Great comment, Saul. The new showing requirement has generated the most questions from practicing brokers/agents — from the boots on the ground trying their best to comply with the settlement’s lack of clarity.
Here’s an additional resource:
https://thedataadvocate.com/is-there-a-difference-between-tour-and-open-house/