Starting August 17, 2024, new regulations require buyers to formalize their relationship with real estate agents before touring homes. This formalization comes in the form of a written agreement known as the Buyer Representation and Broker Compensation (BRBC) Agreement in California. This change follows a settlement in a high-profile legal case involving the National Association of REALTORS® (NAR) and addresses issues related to commission transparency and fairness.
The BRBC Agreement is a contract between a buyer and their real estate agent. It details the following:
- **Representation**: The agent's role in assisting the buyer with finding and purchasing a property.
- **Compensation**: The agreed-upon payment for the agent's services.
The agreement ensures that both parties understand their obligations and the terms of compensation. This contract is necessary due to recent legal changes and is designed to protect both buyers and agents in the home buying process.
The shift stems from a settlement related to multiple lawsuits against the NAR for alleged price-fixing practices. Previously, commission rates for buyer's agents were commonly listed in Multiple Listing Services (MLS). As a result of the settlement, these commission details will no longer be included in MLS listings, impacting how commissions are negotiated and paid.
Many experts anticipate that sellers will continue to cover both agents' commissions to attract buyers who might otherwise be deterred by additional costs.
The BRBC Agreement is a contract between a buyer and their real estate agent that outlines the agent's role in the property search and the compensation they will receive. It formalizes the relationship and ensures clarity on payment terms.
The new requirement is due to a legal settlement involving the National Association of REALTORS®. The settlement aims to address concerns about commission transparency and fairness. The BRBC Agreement helps establish clear terms for compensation and representation.
Before you can tour homes with a real estate agent, you must sign the BRBC Agreement. This agreement will specify how your agent will be compensated. If the seller does not offer compensation, you may need to pay your agent's fee directly.
If the seller does not offer a commission, the BRBC Agreement will ensure that you, as the buyer, are aware of and agree to cover the agent's commission yourself.
Many industry experts believe that sellers will continue to pay commissions for both the seller’s and buyer’s agents. This practice helps in attracting buyers who may be reluctant to cover additional costs themselves.
The BRBC Agreement is designed to be flexible. It is advisable to discuss any concerns or desire for changes with your agent. The agreement can be tailored to address your needs, and you may have options for modifying or terminating the agreement under certain conditions.
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