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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.
PRDS updated contracts and forms that comply with the new National Association of REALTORS® settlement guidelines for Buyer and Seller Representations are available today. REALTOR® members of the Silicon Valley Association of REALTORS® (SILVAR) and the San Mateo County Association of REALTORS® (SAMCAR) can access these forms on all electronic platforms – on the Transactions/zipForm Edition, TransactionDesk/Instanet platform at https://prdsforms.transactiondesk.com and on the SILVAR and SAMCAR websites, and on www.Glide.com (for SILVAR members only).
PRDS Forms is an extensive line of online forms for residential purchase and sales transactions. These forms are available online as a member benefit to all REALTOR® members of SILVAR and SAMCAR. The Standard Forms Committee, which is composed of brokers and top producers from SILVAR and SAMCAR, meets every other week and works very hard to make sure all forms are current and reflective of local practice.
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
There appears to be a growing number of fraudsters posing as owners of vacant land and contacting real estate agents and requesting their assistance to sell a property they don’t own. The California Department of Real Estate has issued a warning to all California licensees, as law enforcement agencies and District Attorney offices around California are reporting a sharp increase in this type of real estate fraud.
In the scheme, the criminal:
• Searches public records to:
1. Identify properties that are free of mortgage or other liens.
2. Identify the property owner – This often includes vacant lots, long-term rentals, or vacation rentals, with targeted properties often owned by the elderly and/or foreigners.
• Poses as the property owner and contacts a real estate agent to list the property for sale
• Requests that the property be listed below market value to generate immediate interest.
• Requests that no “For Sale” sign be posted on the property.
• Requests preference for a cash buyer, quickly accepts an offer, and demands a quick closing.
• Refuses to meet in person, preferring to be contacted through email, text, or over phone, and typically refusing video calls.
• Refuses to attend the signing and claims to be out of state or country.
• Demands to use their own notary, who then provides falsified documents to the title company or closing attorney.
• Insists that proceeds are wired to them.
On their own, these characteristics may not be red flags. But, when several or most occur, the risk becomes more apparent. Unfortunately, the scheme is usually only discovered when recording the transfer of documents with the appropriate county.
SILVAR is urging all REALTOR® members to exercise due diligence in taking the proper steps to verify the owner of a property before accepting a listing.
Follow these tips from the DRE on how to prevent the scam:
• Request an in-person or virtual meeting and see proper government-issued identification.
• If they won’t meet, require them to utilize the services of third-party identity verification service provider.
• Conduct an online search using the name of the property owner. Look for a phone number and recent photo. If you find a number, contact that person and verify they are the actual owner.
• Send via overnight mail a copy of the electronically signed listing to the address or record with a request to confirm the listing’s accuracy. This will alert the legitimate owner of potential fraud.
• Require that the property owner provide a copy of a voided check with the seller’s disbursement authorization form.
• Use a wire verification service or confirm wire instructions match account details on the seller’s disbursement authorization form.
DRE also encourages brokers to develop written policies with respect to listing properties in which the licensee and seller have never met in-person. Alleged cases of this or any other type of real estate fraud should be reported to local law enforcement authorities or local District Attorney’s office. If there is another real estate licensee potentially involved in the fraud, you should provide the information to DRE through its Enforcement Online Complaint System.
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.
SILVAR is proud to announce SILVAR member Bernie Leung is among 50 finalists vying for a spot in REALTOR® Magazine‘s 2023 Class of 30 Under 30. Leung is a REALTOR® with Compass Menlo Park.
Every year, REALTOR® Magazine‘s Class of 30 Under 30 recognizes top accomplished real estate professionals nationwide. Selection of finalists is based on business success, innovation, and community involvement. The finalist who receives the most online votes is guaranteed a spot in this year’s 30 Under 30 class and will be the Web Choice Award winner. Judges then select the other 29 honorees from the field of finalists.
Born in San Francisco, Leung has a Bachelor of Science degree in Finance from Menlo College in Atherton and graduated from both Stanford University’s Influence and Negotiations Strategies and Harvard University Negotiation & Leadership Program. He is also an event organizer for Silicon Valley Startup: Idea to IPO, a 26,000+ member organization.
He believes in real estate and wants to make his clients happy and them make their dream of homeownership come true. “I have a super client obsession,” Leung remarked.
Ironically, it was Leung’s father who pushed him to get into real estate. “My dad would say there are only two paths in life – stocks and real estate.” He got his real estate license in 2016, “just to make my dad happy.” Previous work as an accountant for a non-profit got him a job in DeLeon Realty’s finance department. Then one day, the firm was short-staffed and asked him to host an open house. It was then that he discovered that his natural talents and skillset were well-suited to a people businesses like real estate. Transitioning from finance to becoming a real estate agent was inevitable.
During his seven years at DeLeon Realty, he became the most senior top producing agent at the firm. From 2019-2021, Leung’s annual sales volume ranged from $40-50 million. He is happy his dad pushed him toward real estate.
“My dad is both my mentor and hero,” he exclaimed.
Today, with Compass, Leung is a solo agent and a top producer with a current sales volume of $34 million. His average sales transaction is $3.8 million.
Leung said he entered the 30 Under 30 contest because at age 28 (he’ll turn 29 next month), being the youngest REALTOR® with his sales volume in a market dominated by much older peers, he wants to show younger or new agents that anything is possible and prove that you can succeed in real estate despite being under 30 years old.
“Age is just a number. My goal is to inspire the next generation of movers and shakers in real estate to defy all odds and find success by carving out their own unique path,” said Leung.
Leung has a chance to do just that by being part of REALTOR® Magazine‘s 30 Under 30 Class of 2023.
Voting is now open. See Bernie’s profile HERE, then click on Read More and vote, or you can directly vote for him HERE.
You can vote once every 24 hours per candidate. The voting period closes March 31 at 10 AM PT.
SILVAR wishes Leung the best of luck in the contest!
The California Association of REALTORS® formally apologizes for its past discriminatory policies, including Proposition 14, a successful 1960s ballot initiative that overturned the State of California’s first fair housing law. C.A.R.’s leaders issued the apology in a press release and in a live press conference.
Regrettably, the California Real Estate Association (CREA), now known as C.A.R., once played a leading role in segregation and exclusionary practices in housing. California communities still grapple with wealth and homeownership inequities. For decades, CREA promoted policies that encouraged discrimination and the idea that neighborhood integration would negatively impact property values. The Association endorsed racial zoning, “redlining” and racially restrictive covenants.
“The Association was wrong. We not only apologize for those actions, we strongly condemn them, and we will continue working to address the legacy of these discriminatory policies and practices,” said C.A.R. President Otto Catrina.
CREA was behind Article 34, a law passed in the 1950s that remains in place that makes it very difficult to build affordable housing in California. The Association also excluded women and people of color from membership.
In the 1960s, California’s first fair housing law, the Rumford Fair Housing Act, was passed. CREA actively encouraged its members to support Proposition 14, a law that overturned the Rumford Act and modified California’s constitution so that the state could not prohibit private property owners from engaging in discrimination. The U.S. Supreme Court overturned the proposition as unconstitutional.
In the years since the passage of the federal Fair Housing Act of 1968, the California Fair Employment and Housing Act and other fair housing laws, C.A.R. has prioritized understanding and addressing the unique homeownership barriers impacting communities of color and other historically excluded communities.
“We have continued to unpack our difficult and sometimes obscure history of opposing fair housing laws, promoting segregation and racial exclusion prior to the Fair Housing Act of 1968. As an organization that deeply values inclusion, we can’t change the actions of the past, but we are taking bold action now to help build a more equitable and just future,” said Catrina.
For instance, C.A.R. recently sponsored a law requiring periodic implicit bias training for all real estate salespersons. Additionally, C.A.R. helped shape a new law that strengthens consumer protection in instances of appraisal bias.
Currently, C.A.R. is working to address the legacy of discriminatory policies in a variety of ways. These include:
● Offering a closing cost grant for members of underserved communities.
● Donating to the Black Wealth Builders Fund, a down payment assistance program for Black home buyers in the Bay Area.
● Partnering with and sponsoring the work of nonprofit organizations that support greater homeownership for members of underserved communities.
● Sponsoring and supporting a variety of policies that address supply and affordability challenges for communities of color.
● Co-sponsoring a bill that would overturn Article 34, a law California REALTORS® helped pass in the 1950s that makes it much harder for California communities to build affordable housing.
● Supporting a law that provides a system for redacting restrictive covenants in property records.
“The Silicon Valley Association of REALTORS® (SILVAR) has always promoted homeownership for all. We have promoted C.A.R.’s Fairhaven simulation, an innovative online simulation training, where agents walk in the shoes of a homebuyer facing discrimination. The training provides customized feedback that agents can apply to daily business interactions,” said Brett Caviness, president of SILVAR. “We have also introduced a number of diversity, equity and inclusion programs to our members, so all are aware that discrimination is not allowed in any facet of real estate.”
Every day REALTORS® across the nation put themselves in positions where they can be victims of dangerous crimes. Whether it’s putting up signs along the highway, meeting a new client, or showing a house to a prospective buyer, your personal safety is often at stake. To raise awareness about this important issue, the month of September is officially designated by the National Association of REALTORS® as REALTOR® Safety Month.
“The safety of the Silicon Valley Association of REALTORS®’ 5,000 members is a top priority. An open house can be a great sales tool, but it also exposes you to numerous unfamiliar people for the first time. Thieves and assailants have been known to prey on open houses. We always caution our members to be watchful of suspicious behavior when hosting an open house,” said Brett Caviness, president of SILVAR.
Take these steps to stay safe at open houses:
- If possible, always try to have at least one other person working with you at an open house.
- Check your cell phone’s strength and signal prior to the open house. Have emergency numbers programmed on speed dial.
- Upon entering a house for the first time, check all rooms and determine several “escape” routes. Make sure all deadbolt locks are unlocked to facilitate a faster escape.
- Make sure that if you were to escape by the back door, you could escape from the backyard. Frequently, high fences surround yards that contain swimming pools or hot tubs.
- Have all open house visitors sign in. Ask for full name, address, phone number and email.
- When showing the house, always walk behind the prospect. Direct them; don’t lead them. Say for example, “The kitchen is on your left,” and gesture for them to go ahead of you.
- Avoid attics, basements, and getting trapped in small rooms.
- Notify someone in your office, your answering service, a friend or a relative that you will be calling in every hour on the hour. And if you don’t call, they are to call you.
- Inform a neighbor that you will be showing the house and ask if he or she would keep an eye and ear open for anything out of the ordinary.
- Don’t assume that everyone has left the premises at the end of an open house. Check all of the rooms and the backyard prior to locking the doors. Be prepared to defend yourself, if necessary.
For more information on REALTOR® and consumer safety, visit www.realtor.org/safety.
Silicon Valley Association of REALTORS® says ... 