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The Sitzer | Burnett verdict has changed the way our industry practices real estate for the foreseeable future. Resulting practice changes required us to unlearn the old way of doing business and relearn an entirely new way of doing business.
We’ve been inundated with a plethora of trainings on how to complete buyer representation agreements, compensation agreements, listing agreements, addendums, amendments, cancellation and termination agreements along with lease agreements as they relate to working with buyers, sellers, landlords and tenants.
Here are seven things to watch when working with our new forms in the post-Sitzer | Burnett era:
Buyer representation
Working with buyers or prospects with a properly documented business relationship is everything in a post-Sitzer | Burnett world. There are various options for buyer representation agreements, from exclusive agreements to limited touring agreements to single property showing agreements.
Make sure you select the agreement that best fits the relationship you have with the consumer and, if the agreement is not exclusive, that you can transition to an exclusive agreement should you both desire to do so.
Make sure you complete all fields and leave nothing blank that could jeopardize your ability to get compensated as follows:
Term: Ensure you are completing the term in compliance with any state time limits (if applicable) or a term that both you and the buyer are comfortable with. For example, California law now requires that a buyer representation agreement cannot exceed more than three months.
Pay close attention to timing if the agreement expires while the buyer is making an offer, goes under contract, or closes. Make sure you and the buyer understand what happens in the agreement. Does it automatically extend until one of the above activities ceases, or do you need to amend it to put an extension in place, for example?
Type of property: Make sure you have completed this in a way that accurately reflects the search with regards to areas, type of properties, price range and other criteria. You want to make sure you don’t make it too narrow; you may jeopardize your ability to be compensated.
At the same time, you don’t want to make it so broad that it is hard to really determine what the search was (for example, the entire state) unless you were truly involved in a property search covering that.
Agency relationships: Ensure you understand what this section says in your buyer representation agreement and whether it references a separate agency disclosure that needs to be given to the buyer to sign.
Some states, like Florida, have different representation agreements depending on the kind of representation that is being entered into such as transaction brokerage, single agency and no representation buyer agreements. Make sure you understand the differences when figuring out the right agreement for the business relationship with the buyer and whether you can transition to a different kind of agency relationship, if applicable in your market.