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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
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.
In Silicon Valley, where inventory is at an all-time low and interest rates are rising and competition for home is fierce, many homebuyers feel dejected. Many feel they can never own a home in the region. Silicon Valley Association of REALTORS® President Brett Caviness is one to say, “Never say never.”
“It may seem bleak because of the tough competition, but I’ve known first-time homebuyers who have succeeded in purchasing their first home. If that’s your goal, I would never give up trying,” says Caviness.
Below are some tips Caviness provides when searching for a home in this competitive market:
1. Find a REALTOR® you can trust. It is critical that the agent you choose is both skilled and a good fit with your personality.
“Not everybody knows there is a difference between a REALTOR® and a real estate agent. REALTORS® are members of the National Association of REALTORS® and must abide by a Code of Ethics. They are held to a higher standard of conduct and required to undergo additional training in current business practices, unlike other real estate licensees,” says Caviness. “A local REALTOR® can provide the vital market pulse, network of connections, and expert insight and skills needed not only to craft a compelling offer, but to get it accepted.”
2. Get your ducks in a row. Examine your budget, get your finances in order with adequate funds that are readily accessible. Make sure you have an excellent credit rating and getting pre-approved by a lender so you know how much you can afford.
Pro Tip: “Pre-approval with underwriting goes a step further than getting prequalified or even a standard preapproval because your lender will commit in writing to fund your loan pending a successful appraisal of the home and a few other conditions. This enables you to move quickly and make an offer that is not contingent upon obtaining financing,” explains Caviness.
3. Identify desired neighborhoods and your wants versus needs. Your REALTOR® can help you identify homes that meet your needs but may be in a location you did not yet consider, or have features you were not initially thinking of.
“Accept that no house is ever perfect. Focus on location and the things that are most important to you and let the minor stuff go. Certain wants, such as stainless appliances or hardwood floors, can be added later, but families with children may want to take into account the school district, number of bedrooms, and a decent sized backyard. These things cannot be addressed later,” says Caviness.
4. Be prepared to act quickly. Homes are not staying in the market long, so when a house that is in your budget and checks off many of your needs, be ready to submit an offer quickly, or you could risk missing out on the home altogether.
5. Bid competitively and limit contingencies. In a seller’s market buyers need to put forward their highest offer from the very beginning, or they are likely to lose out on the home.
“Don’t expect a discount. In San Mateo and Santa Clara counties it’s a ‘play to win’ market where buyers are paying over asking,” says Caviness. “With that said, don’t get caught in a buying frenzy either. Just because there is competition doesn’t mean you should just buy anything. After you’ve seen enough homes, you’ll feel comfortable going for the one that feels right.”
Caviness adds in multiple bidding situations it is advisable to limit contingencies and think what could be compelling to offer the seller like a quick close, or a period where they may stay in the home after the sale. “Be flexible and remove unnecessary contingencies. Inspections are necessary, but you may lose the bid negotiating on minor items you can replace or repair later. Now is not the time to be picky.”
Real estate experts forecast despite lower interest rates, this year’s housing market will continue to be a challenge with the housing shortage. Mary Kay Groth, 2020 president of the Silicon Valley of REALTORS®, tells buyers they should not be discouraged. Groth is a REALTOR® with Sereno Group in Los Gatos, CA.
“Buyers should not give up their dream of homeownership. They need to be prepared, find an experienced REALTOR® they can trust, and be ready to jump in when they find the right home,” says Groth. “All real estate is local, so it is important to work with a REALTOR®who is familiar with your neighborhood of choice.”
Here are strategies Groth suggests homebuyers employ:
1. Examine your finances.
Before beginning your home search, examine your monthly income, expenses, debt payments (auto loans, student loans, minimum credit card payments) and savings. Figure out how much you can use for a down payment. Depending on the loan you qualify for, you’ll need at least 3 to 20 percent for a down payment.
2. Check your credit score. A higher credit score typically means a better interest rate and loan options. According to the Federal Reserve, 90 percent of mortgages taken out by homebuyers in the first quarter of 2019 had a score of at least 650; 75 percent had a score above 700.
2. Get pre-approved by a lender.
Once you have organized your finances, visit a lender (it is advisable to visit more than one lender) and get pre-approved for a mortgage loan; not just pre-qualified.
“A pre-approval letter from a lender shows sellers you are a serious buyer and have the lender’s backing,” says Groth.
Groth advises buyers to be cautious about paying the maximum they can afford. “You will need some reserve to enhance the home, do repairs or purchase furnishings. You want to be comfortable with your house payments and be able to keep your house.”
3. Begin your home search. With pre-approval and a price range, you can begin your home search with your REALTOR®. Let your REALTOR®know your criteria for a home. Focus on important characteristics that will matter for the next five years – location, amenities, community, etc. With the help of a skilled and experienced REALTORS®, you will be able to learn the fair market value of homes selling in the area.
4. Be ready to decide quickly. When you find the right home, go in with your absolute best offer. “In a multiple offer situation, you may not get a second chance,” says Groth.
5. Avoid complex contingencies. Don’t be overly demanding. Contingencies can weaken a “sure deal.” The seller wants assurance the contract will close escrow in the designated time frame.
6. Include a personal letter to the seller. Groth notes, “A personal letter to a seller puts a real person behind the offer. There have been multiple offer situations where sellers have been moved by a buyer’s letter that price did not matter.”
7. Understand the documents. When your REALTOR® reviews the purchase contract, disclosures and other documents, make sure you understand. If you don’t understand, ask.
Even though income and sales volume of REALTORS® have dropped slightly in the past year, membership in the National Association of REALTORS® has increased, as more younger agents continue to enter the industry. According to the “2018 National Association of REALTORS® Member Profile,” membership increased 6 percent from 1.22 million in March 2017 to 1.30 million in April 2018.
“Younger Americans are seeking business opportunities that working in real estate provides,” said NAR chief economist Lawrence Yun. But Yun also noted the overall trend is still a slightly older age profile.
Members of NAR account for about half of all active real estate licensees in the U.S. REALTORS® go beyond state licensing requirements by subscribing to NAR’s Code of Ethics and standards of practice and committing to continuing education.
“All real estate licensees are not the same. Only real estate licensees who are members of the National Association of REALTORS® are properly called REALTORS®. They display the REALTOR® logo on their business card or other marketing material,” explained Bill Moody, president of the Silicon Valley Association of REALTORS®. The REALTOR® association has over 4,500 REALTORS® and affiliate members engaged in the business of real estate on the Peninsula and in the South Bay.
“REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are required to complete a two and a half hour Code of Ethics course every two years,” said Moody.
The NAR member survey found the median age of REALTORS® was 54 this year, slightly up from 53, the last two years. Sixty-three percent of realtors are female. The typical REALTOR® is a 54-year-old white female who attended college and is a homeowner.
Sixty-five percent of REALTORS® are licensed sales agents, 21 percent hold broker licenses, and 15 percent hold broker associate licenses. New members tended to be more diverse than more experienced members. Twenty-five percent with two years of experience or less were minorities, up from 22 percent last year.
According to Moody, the national survey reflects the profile of incoming members in the local REALTOR® group, which has over 4,500 members. “Our new members definitely reflect a younger and more diverse group of agents,” said Moody.
Impacted by low inventory, the typical number of transactions decreased slightly from 12 transactions in 2016 to 11 transactions in 2017. REALTORS® said the main factors limiting potential clients in completing transactions are difficulty finding the right property (35 percent), housing affordability (17 percent), and difficulty in obtaining mortgage financing (12 percent).
All REALTORS® MUST COMPLETE ethics training between the January 1, 2017 and December 31, 2018 cycle or be suspended by NAR.
The National Association of REALTORS® (NAR) requires that every REALTOR®, in order to maintain membership in the Association of REALTORS®, must complete a 2 1/2 hour Code of Ethics course every two years. This means all REALTOR® MUST COMPLETE the ethics training at some point between the cycle of January 1, 2017 and December 31, 2018. Failure to comply with this required ethics training is a violation of a membership duty and will result in suspension and possible termination from the member’s primary Association.
It is this mandatory ethics training and membership with NAR that differentiates REALTORS® from real estate agents. Although both are real estate licensees, REALTORS® proudly display the REALTOR “®” logo on the business card or other marketing and sales literature. REALTORS® are committed to treat all parties to a transaction honestly. REALTORS® subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.
REALTORS® can take the ethics training online through NAR. It’s easy and it’s FREE. Visit NAR CODE OF ETHICS ONLINE for more information on online classes and this mandatory NAR requirement. Code of Ethics training is also included in CalBRE license renewal requirements, so if a member has renewed their license between January 1, 2017 and December 31, 2018, their Code of Ethics requirement is covered.
If you have already taken Code of Ethics training for this period outside of California license renewal, via NAR or the California Association of REALTORS® (C.A.R.) or elsewhere, please email a copy of the certificate to your primary Association. If you are a member of the Silicon Valley Association of REALTORS® (SILVAR), you can email a copy of your certificate to membership@silvar.org before the deadline of December 31, 2018. The next compliance cycle will start January 1, 2019 and end on December 31, 2020.
Silicon Valley Association of REALTORS® says ... 