LEGAL WORKSHOP 7/10/24
Watch the recording of the New CAR Forms Released 7/10/24 With KW Pasadena Legal Vince MacIsaac . CAR forms will be available July 24th.
For internal use only
Use your CAR login to download file on the sharepoint drive
Key Updates on Broker Compensation and Buyer Representation Agreements
Legal Changes and Best Practices
This session addressed significant changes to broker compensation and buyer representation agreements due to recent lawsuits and Department of Justice (DOJ) rulings. The updates focus on antitrust concerns, particularly the removal of cooperative broker compensation (CBC) forms and the elimination of the option for listing agreements to include buyer’s agent compensation. Moving forward, compensation for buyer's brokers must be negotiated directly in the buyer’s offer, typically using the SPBB (Seller Payment to Buyer’s Broker) form. Sellers are not obligated to pay buyer’s agents unless negotiated within the transaction.
Additionally, buyer representation agreements are now required and offer exclusive or non-exclusive terms. Under exclusive agreements, brokers are paid regardless of who finds the property, while non-exclusive agreements only pay brokers if they were directly involved in the transaction. Open house and unrepresented buyer scenarios were discussed, emphasizing the importance of clear non-agency disclosures to avoid accidental representation.
Agents are encouraged to attend upcoming training sessions and Town Hall meetings to fully understand the new forms and regulations.
Top 5 Takeaways:
Removal of Buyer Agent Compensation from Listings: This must now be negotiated in the buyer’s offer.
SPBB Form: A new form to request seller payment for the buyer’s broker.
Exclusive vs. Non-Exclusive Buyer Representation: Exclusive representation guarantees commission, while non-exclusive requires broker involvement.
Open House Procedures: Agents must use a non-agency disclosure form to avoid accidental representation.
Concessions and Offers: Seller concessions can be used for repairs or buyer’s broker compensation but must be negotiated.
5 Best Practices:
Always Use the SPBB Form: Include it in offers to request seller payment for the buyer’s broker.
Clarify Buyer Representation: Ensure clear agreements, whether exclusive or non-exclusive, are signed before showing properties.
Stay Updated with Training: Attend upcoming Town Hall meetings and classes to fully understand the new rules.
Use Non-Agency Disclosures at Open Houses: Avoid accidental representation by having buyers sign these forms.
Negotiate Seller Concessions Wisely: Be clear about their potential use in offers to benefit your clients.
Top 10 FAQs and Answers:
What is the SPBB form?
The SPBB (Seller Payment to Buyer’s Broker) form requests the seller pay the buyer’s agent’s commission.
Can the seller still pay the buyer’s agent?
Yes, but it must be negotiated through the offer, not in the listing agreement.
What is the difference between exclusive and non-exclusive buyer representation?
Exclusive representation ensures payment regardless of how the property is found, while non-exclusive requires direct involvement from the broker to receive compensation.
Do we need to use non-agency disclosure forms at open houses?
Yes, to avoid accidentally representing a buyer who walks through an open house.
What are seller concessions?
Monetary offers from the seller that can be used for various purposes, such as repairs or paying the buyer's broker, but must be negotiated.
How does this affect loans with limits on seller credits?
Loan limits on credits still apply, and all compensation and credits must fit within those limits.
Is the use of buyer representation agreements now mandatory?
Yes, for all residential transactions, buyer representation agreements are required to formalize the broker-buyer relationship.
What happens if my client wants to exclude certain properties from the buyer representation agreement?
You can list specific properties that are excluded to avoid double commission obligations.
Can a non-exclusive agreement be changed to exclusive later?
Yes, agreements can be modified with the consent of both the broker and the client.
How are seller concessions reported at closing?
Concession details are now collected and reported as part of the closing process, categorized by how the concession was applied.
