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As a result of the National Association of REALTORS® Settlement agreement related to broker commissions, as of August 17, one of the requirements is buyers nationwide are required to sign a written buyer agreement (also known as a broker buyer representation agreement) after they have selected a real estate professional they want to work with. To help consumers understand the new rules and practices, NAR has produced several consumers guides on each topic.
Here are what buyers should know about the written buyer agreement:
What is a “written buyer agreement?” What does it do? A written buyer agreement is an agreement between you and your real estate professional outlining the services your real estate professional will provide you, and what they will be paid for those services.
Why am I being asked to sign an agreement? Written buyer agreements became a nationwide requirement for many real estate professionals as a part of the NAR’s proposed settlement of litigation related to broker commissions.
Are these agreements new? In some places, yes. Many states have required them for years, while some have not. As a result, it is entirely possible you or others you know have not used them in the recent past. Regardless, they are now a nationwide requirement for real estate professionals.
Are these agreements negotiable? Yes! You should feel empowered to negotiate any aspect of the agreement with your real estate professional, such as the services you want to receive, the length of the agreement, and the compensation, if any. Compensation between you and your real estate professional is negotiable and not set by law. In the written agreement, the compensation must be clearly defined (e.g., $0, X flat fee, X percent, X hourly rate) and not open-ended or a range. Only sign an agreement that reflects what you have agreed to with your real estate professional.
How do I benefit from these agreements? These agreements clearly lay out what services you, as a homebuyer, expect your real estate professional to provide, and what your real estate professional will be paid. These agreements make things clear and reduce any potential confusion at the outset of your relationship with your real estate professional.
When do I need to sign an agreement? You will be asked to enter into a written buyer agreement with your real estate professional before “touring” a home with them, either in-person or virtually. If you are simply visiting an open house on your own or asking a real estate professional about their services, you do not need to sign a written buyer agreement.
Does this mean I have to pay my real estate professional out of pocket? Not necessarily. While you are responsible for paying your real estate professional as outlined by your agreement, you can still request, negotiate for, and receive compensation for your real estate professional from the seller or their agent.
Do agreements dictate a specific type of relationship I need to have with my real estate professional? No. You are allowed to enter into any type of business relationship with your real estate professional allowed by state law where you are purchasing a home.
Can I change or exit an agreement? Yes. You and your real estate professional can mutually agree to change your agreement. Agreements may have specific conditions under which they can be exited, so read the text of the agreement and speak with your real estate professional if you would like to change or exit your agreement. Realtors are members of the National Association of Realtors and are ethically obligated to act in your best interest.
For more information on this topic and other guides for consumers, visit https://www.nar.realtor/the-facts.
REALTORS® face real threats when working in the field, and it’s crucial to be prepared. September is REALTOR® Safety Month, and there’s no better time to reassess your safety protocols and make safety a top-of-mind priority.
The National Association of REALTORS® 2023 REALTOR® Safety Survey highlights alarming statistics of the potential dangers REALTORS® face while on the job:
- 56,000 REALTORS® were victims of a crime while performing their duties.
- 322,000 REALTORS® felt fear for their safety while on the job.
- 406,000 REALTORS® don’t have safety protocols in place to protect themselves.
Join NAR’s REALTOR® Safety Month webinar on Wednesday, September 18, 10 AM Pacific Time, and learn how to identify potential threats, leverage technology for safety, and effectively handle emergencies.
REGISTER HERE
Make the 10-Second Rule a habit whenever you are on the road.
The 10-Second Rule for Keeping Safe on the Road
Inattention is one of the main reasons people find themselves in dangerous situations.
Take a few precious seconds to assess your surroundings to help you spot and avoid danger. Make it a habit, and then share it with someone else.
Take two seconds when you arrive at your destination.
• Is there any questionable activity in the area?
• Are you parked in a well-lit, visible location?
• Can you be blocked in the driveway by another vehicle?
Take two seconds after you step out of your car.
• Are there suspicious people around?
• Do you know exactly where you’re going?
Take two seconds as you walk towards your destination.
• Are people coming and going or is the area unusually quiet?
• Do you observe any obstacles or hiding places in the parking lot or along the street?
• Is anyone loitering in the area?
Take two seconds at the door.
• Do you have an uneasy feeling as you’re walking in?
• Is someone following you in?
Take two seconds as soon as you enter your destination.
• Does anything seem out of place?
• Is anyone present who shouldn’t be there or who isn’t expected?
Give your safety the attention you deserve. All these take a total of 10 seconds! Protect yourself with more safety tips and resources from www.nar.realtor/safety
Here are a few reminders from the National Association of REALTORS® regarding actions that are required to obtain a release of liability and protection from claims related to broker commissions:
- All MLSs must implement practice changes by August 17 to remain in compliance with NAR policy. Some MLSs are implementing practice changes earlier. MLSLIstings will implement rule changes tomorrow, August 13.
- Offers of compensation are prohibited on MLSs. Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make homeownership and the benefits of professional representation more accessible to buyers, including first-time homebuyers, increase homeownership opportunities for historically underserved groups, and benefit sellers by expanding the potential buyer pool.
- Agents working with a buyer must enter into a written agreement before touring a home. Ahead of August 17, NAR encourages all members to address form changes and prepare to educate real estate professionals and consumers about revised forms. NAR policy does not dictate terms of buyer agreements, including the type of relationship – e.g., agency, non-agency, exclusive, or non-exclusive – or the length of the term.
The practice changes are detailed here, and clarifying information is available in NAR’s FAQ on facts.realtor
The role of the REALTOR®, the benefits received from member involvement in REALTOR® association activities, and the importance of organized real estate to REALTORS® and their clients were laid out to members of the Silicon Valley Association of REALTORS® (SILVAR) by CEO Paul Cardus at the beginning of the year.
Cardus shared the following scenarios of what life would be for an agent or consumer if REALTOR® associations like the National Association of REALTORS® (NAR), California Association of REALTORS® (C.A.R.) or SILVAR did not exist in light of just one benefit, that of legislative advocacy:
- Agents would not be independent contractors; they would be employees working for banks.
- Services, including commissions, would be taxed.
- Conforming loan limits might be set at $400K, if they existed at all, instead of $1,149,825 in 2024.
- FHA loans likely would not be available.
- There would be no capital gains exclusion, mortgage interest deduction or 1031 exchanges.
- The commercial secondary mortgage market, which provides a stable flow of credit, would not exist.
- The liquidity, stability and affordability provided by Fannie Mae and Freddie Mac in the nation’s housing finance system would not exist.
- HUD would not employ local agents for sales.
- There would be no multiple listing service (MLS) or portals with standardized, reliable listing data.
- Universal buyer representation would not exist, leaving many buyers unprotected in the biggest transaction of their lives.
- Proposition 13 would not exist, making it hard for California’s seniors to afford to stay in their homes.
- Without impartial C.A.R. and PRDS standard forms provided by REALTORS® for REALTORS®, buyers and sellers would need attorneys to review and negotiate various one-sided forms for each transaction and be responsible and liable for researching state and local ordinances and codes, instead of using PRDS advisories.
- Flood insurance would become unobtainable.
- Property sales would require multiple point-of-sale approvals, like sewer lateral inspection and repair, from multiple agencies and inspectors. Sellers might have to invest tens of thousands in property upgrades just to sell. Escrows could extend for months or even longer.
- Rent control would be in place statewide, making it challenging to sell a tenant-occupied home or leave the business as a housing provider.
- Opportunity to Purchase (OPA) programs, like the one SILVAR helped defeat in East Palo Alto recently, would require property owners to offer homes to tenants or nonprofits before listing a rental property on the market and mandate the right of first refusal once an offer is accepted.
- Thousands of other legislative “bright ideas” would be blocked or kept in check because organizations like SILVAR, C.A.R. and NAR would not be around to engage volunteers, coordinate the resources, and hire professional staff to advocate on behalf of REALTORS® and their clients.
“The benefits that REALTORS® and their clients receive through REALTOR® membership in a REALTOR® association are quite the value,” said Cardus.
The role of the REALTOR®, the benefits received from member involvement in REALTOR® association activities, and the importance of organized real estate to REALTORS® and their clients were the main focus of the 2023 Economic Seminar & General Membership Meeting of the Silicon Valley Association of REALTORS® (SILVAR).
SILVAR CEO Paul Cardus laid out the following scenarios of what life would be for an agent or consumer if REALTOR® associations like the National Association of REALTORS® (NAR), California Association of REALTORS® (C.A.R.) or SILVAR did not exist in light of just one benefit, that of legislative advocacy:
- Agents would not be independent contractors; they would be employees working for banks.
- Services, including commissions, would be taxed.
- Conforming loan limits might be set at $400K, if they existed at all, instead of $1,149,825 in 2024.
- FHA loans likely would not be available.
- There would be no capital gains exclusion, mortgage interest deduction or 1031 exchanges.
- The commercial secondary mortgage market, which provides a stable flow of credit, would not exist.
- The liquidity, stability and affordability provided by Fannie Mae and Freddie Mac in the nation’s housing finance system would not exist.
- HUD would not employ local agents for sales.
- There would be no multiple listing service (MLS) or portals with standardized, reliable listing data.
- Universal buyer representation would not exist, leaving many buyers unprotected in the biggest transaction of their lives.
- Proposition 13 would not exist, making it hard for California’s seniors to afford to stay in their homes.
- Without impartial C.A.R. and PRDS standard forms provided by REALTORS® for REALTORS®, buyers and sellers would need attorneys to review and negotiate various one-sided forms for each transaction and be responsible and liable for researching state and local ordinances and codes, instead of using PRDS advisories.
- Flood insurance would become unobtainable.
- Property sales would require multiple point-of-sale approvals, like sewer lateral inspection and repair, from multiple agencies and inspectors. Sellers might have to invest tens of thousands in property upgrades just to sell. Escrows could extend for months or even longer.
- Rent control would be in place statewide, making it challenging to sell a tenant-occupied home or leave the business as a housing provider.
- Opportunity to Purchase (OPA) programs, like the one SILVAR helped defeat in East Palo Alto recently, would require property owners to offer homes to tenants or nonprofits before listing a rental property on the market and mandate the right of first refusal once an offer is accepted.
- Thousands of other legislative “bright ideas” would be blocked or kept in check because organizations like SILVAR, C.A.R. and NAR would not be around to engage volunteers, coordinate the resources, and hire professional staff to advocate on behalf of REALTORS® and their clients.
“The benefits that REALTORS® and their clients receive through REALTOR® membership in a REALTOR® association are quite the value,” said Cardus.
REALTORS® face job-related risks every day. Being aware of potential dangers and taking precautions will help you avoid risky situations. In an ongoing effort to keep safety top-of-mind for our members, the National Association of REALTORS® and the Silicon Valley Association of REALTORS® (SILVAR) dedicate September as REALTOR® Safety Month.
Learn to identify potential risks, anticipate threats, and respond proactively. Empower yourself with vital knowledge to navigate a dangerous situation, ensuring your personal safety on the job.
Follow Tips for Showing Properties the Safe Way
When you are showing a vacant property, you can take these simple steps to empower yourself against an attack or theft.
* Be sure to use the lockbox property-key procedure that has been established to improve real estate agent safety. A reliable, secure lockbox system ensures that keys don’t fall into the wrong hands.
* Show properties before dark. If you are going to be working after hours, advise your associate or supervisor of your schedule. If you must show a property after dark, turn on all lights as you go through the home, and don’t lower any shades or draw curtains or blinds.
* Call the office, a friend or family member every hour to let them know where you are.
* Prepare a scenario so you can leave or encourage someone who makes you uncomfortable to leave. Examples: Your cell phone or beeper went off and you have to call your office; you left some important information in your car; or another agent with buyers is on his way.
* When showing a property, always leave the front door unlocked for a quick exit while you and the client are inside. As you enter each room, stand near the door.
* Do not display purses or wear anything of value like expensive jewelry or watches
while at a property. Lock your purse in the car trunk before you arrive. Carry only non-valuable business items except for your cell phone.
* Park at the curb in front of the property, rather than in the driveway. It is much easier to escape in your vehicle if you don’t have to back out of a driveway. Parked in a driveway, another vehicle could purposefully or accidentally trap you.
See more safety tips, videos and webinars at www.REALTOR.org/Safety
State Farm and Allstate insurance companies’ recent announcements that they will stop writing new property insurance policies in California have shaken many property owners in the state. Silicon Valley REALTORS® are aware this will impact their clients and future homebuyers and are ready to provide resources to help with their insurance needs.
State Farm General Insurance Company announced it would cease accepting new applications, including all business and personal lines property and casualty insurance, effective May 27, 2023. This decision does not impact personal auto insurance. State Farm says it made this decision “due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure due to climate change, and a challenging reinsurance market.”
Allstate soon followed with the same announcement stating the company “paused” its offerings so they “can continue to protect current customers.” These two large insurance companies join American International Group (AIG), which notified thousands in California that their policies would not be renewed last year.
“Many of the problems in California are a result of the increasing risks in certain areas of the state, in part due to climate change. The increased risk of fires and floods in more areas have put a strain on both the companies and potentially on the FAIR plan, which is California’s insurer of last resort,” said Jim Hamilton, president of the Silicon Valley Association of REALTORS®.
The California Association of REALTORS® has good information and resources for those who are affected by these recent developments, said Hamilton. “We are asking our members to share the following facts and tips with their clients. Additionally, United Policyholders, a non-profit insurance information resource organization, features a free webinar titled ‘Keeping Your Home Protected When Insurance Options are Limited and Expensive?’ on their website at www.uphelp.org to help consumers find insurance in fire-prone areas.”
- Will State Farm and Allstate continue to service and renew policies of existing clients in the state. Yes, and they will continue to offer new auto insurance policies.
- What are the implications of the decision for prospective homebuyers? In certain high-risk areas of the state, there are very few insurance companies willing to write new policies. In those areas, unless the Insurance Commissioner is successful in his effort to get more private insurers to write policies in such areas, the generally more-costly California FAIR plan may end up being the only property insurance available for those homeowners.
- Will more companies follow State Farm and Allstate’s move? There are still a wide range of companies writing policies in California. However, those willing to write new policies are declining to include properties in higher risk areas. With the departure of State Farm and Allstate, property owners in more high-risk areas may have no other option than the FAIR plan.
- What are the main problems for the insurance market in California? The California market is heavily regulated and has various strict requirements for rate increases, which were put into place by Proposition 103 in 1988. However, there are two areas where possible changes could result in a better climate for insurance without requiring major changes to consumer-friendly rate increase requirements. Those include allowing insurance companies to have rates that better reflect their reinsurance costs and allowing insurance companies to utilize forward looking risk models. Current law only allows companies to look back when setting rates. However, given the issues with climate change, many insurance companies argue that looking backward does not allow companies to adequately capture risk.
- Where can I go for more information about homeowners insurance? The California Department of Insurance provides several information guides, tips and tools to help understand home/residential insurance. You can also call the CDI Consumer Hotline at 1-800-927-4357 for assistance.
The Silicon Valley REALTORS® Charitable Foundation Trust, the charitable arm of the Silicon Valley Association of REALTORS®, presented scholarships to 18 graduating seniors from public high schools in Silicon Valley at the end of the 2022-2023 school year. Each student received a $1,500 scholarship. The scholarship awards are made possible by donations from SILVAR members.
Now in its 24th year, the Charitable Foundation Scholars Program is a partnership effort between the foundation and educators in public high schools located in SILVAR’s service areas. The program recognizes students for their outstanding achievements in academics, extracurricular activities, and community involvement.
The selection committee, chaired by Scholars Program chair Nina Yamaguchi, includes representatives from the local business community and SILVAR. Since its start, the program has awarded $490,500 in scholarships to graduating seniors in communities served by SILVAR members.
“The Silicon Valley Association of REALTORS® established our scholars program as part of a long-term effort to support our communities and schools, and to invest in our youth. Our high schools are among the best in the nation. In addition to honoring our students, the program is an opportunity to thank the teachers, administrators and school board members who make our schools special,” said Nina Yamaguchi, scholarship program chair.
Students who received scholarships, the schools from which they graduated, and the colleges/universities they plan to attend are Celina Ke Yang, Cupertino High School (UC Berkeley);Quan Quoc Bui, Fremont High School (UC Riverside); Emily Z. Serrato, Henry M. Gunn High School (Santa Clara University); Elise Vambenepe, Homestead High School (UC Berkeley); Chaeeun Kwon, Leigh High School (Emory University); Audrey Zhu, Los Altos High School (UC Berkeley); Sharaniya Balasingam, Los Gatos High School (Stanford University); Qihui Sun, Lynbrook High School (Cornell University); Ada Yi Jue Cai, Menlo-Atherton High School (New York University); Hernan Maldonado, Monta Vista High School (UC Riverside); Devan Melwani, Mountain View High School (UC Berkeley); Cayden Gu, Palo Alto High School (Stanford University); Adrienne Ferguson, Prospect High School (Columbia University); Heidi A. Hu, Santa Clara High School (UCLA); Christina Chang, Saratoga High School (New York University); Maddon Hoh-Choi, Westmont High School (UC Berkeley); Sharvi Agrawal, Wilcox High School (Case Western Reserve University); and Keira Mahoney, Woodside High School (UC Berkeley).
“We are very happy that we can continue to assist our youth as they embark on their college career,” said Eileen Giorgi, president of the REALTOR® Charitable Foundation. “The seniors selected for the SILVAR Scholars Program have worked hard and deserve to be recognized. We also thank our members, whose contributions have made it possible to continue our program for 24 years.” Members of the local REALTOR® group presented the scholarship awards to the recipients during senior awards night at their respective schools. The scholarship presenters included Adriane Alston (Christie’s International Real Estate Sereno), Joanne Fraser (Compass), Jim Hamilton (Compass), Jimmy Kang (eXp Realty of California), Wendy Marioni (Compass), Tracey McNeely (Compass), Sunita Merchia (Merchia Realty), Russell Morris (Coldwell Banker Realty), Navneet Parmar (Real Estate Experts), Tammie Peters (Christie’s International Real Estate Sereno), Robert Reid (Keller Williams Realty), Sarah Sanusi (Keller Williams Realty), Stacey Woods (Compass), Selena Young (Coldwell Banker Realty).
Silicon Valley Association of REALTORS® says ... 