The Consumer Federation of America, an industry watchdog, says that the buyer agreements you’re depending on are woefully inadequate to properly protect homebuyers.
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Each week on The Download, Inman’s Christy Murdock takes a deeper look at the top-read stories of the week to give you what you’ll need to meet Monday head-on. This week: The Consumer Federation of America, an industry watchdog, says that the buyer agreements you’re depending 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 service to their clients. While we don’t talk about it as often as we should, this higher level of service is one that we assume when we talk about the way we treat clients.
Central to the commission lawsuits is the idea that the current commission structure doesn’t properly serve clients, whether they’re sellers or buyers. So how much of that perception is real, and how much is perception? What does that say about the way agents are providing fiduciary-level services?
EXTRA: Everything agents should know about fiduciary duties
One of the ways that buyer agents are seeking to protect themselves and their commissions is by implementing existing buyer agreements. In some markets, these have always existed but weren’t commonly used. In other markets, and in some brokerages, they’re part of business as usual.
However, according to industry watchdog Consumer Federation of America (CFA), these buyer agreements may not be enough to protect you — and to help you protect your clients. The group characterized many of the contracts it analyzed as exhibiting problematic language and practices and advised buyers to beware before signing on the dotted line.
A report by the Consumer Federation of America — “Required Buyer Agency Contracts: Impacts on Home Buyers” — examined 43 contracts from 37 states, most issued by state or local Realtor associations. CFA found “unfair practices” in the contracts, advised homebuyers to take precautions before signing them and invited regulators to scrutinize their language.
“As buyer contracts are used with greater frequency,” the report read, “buyers are likely to demand more from these contracts, and an increasing number of agents and their brokers are likely to grow more flexible about agreeing to customer requests.
“Should a buyer ever work with a buyer agent without a contract? It might be wiser to work directly with a listing agent who is a dual agent or transaction broker but also hire an attorney to protect one’s interests.”
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So what do you do to make sure that your buyer agreement passes the smell test? Look at it through the lens of your fiduciary duty and make sure that you’re explaining it thoroughly to your buyer clients. At this point, transparency is your friend and a powerful way to differentiate yourself from agents who might be playing fast and loose with their buyer services and communication.
Here are some of the best recent stories from Inman contributors who are in the field, working with hopeful homebuyers and navigating the new normal of buyer-side representation.
The new agent’s essential guide to the commission
Author and trainer Bernice Ross provides the rundown on what to know, what’s most likely to change, how it may impact your pocketbook and steps to take to be prepared for what’s ahead.
9 post-Sitzer questions we still don’t have answers
Change always brings chaos and disruption, broker Cara Ameer writes. While many of these issues have been lurking in the background, they illustrate the work that remains to be done.
Objection-handling scripts for the buyer representation
If you’re rethinking your buyer consultation and implementing a buyer representation agreement, team leader Carl Medford shares what you need to know to explain the change to your clients.
EXTRA: Stop! Before you send that buyer listings, ask these 47
Christy Murdock is a freelance writer, coach and consultant and the owner of Writing Real Estate. Connect with Writing Real Estate on Instagram and subscribe to the weekly roundup, The Ketchup, in either newsletter or podcast form.