Hear ye! Hear ye! Times, they are a changin’.
So, what exactly is happening?
Beginning July 1, all real estate licensees in Indiana are required by law to formalize their relationship with their buyers through a written agreement that has a definite date of expiration—a signed Buyer’s Exclusive Agency Contract. This requirement is identical to the requirement that listing brokers have a written listing agreement with their sellers. (Indiana now joins 19 other states that currently require written buyer representation agreements.) This is for both residential and commercial properties.
Here are some frequently asked questions that I’m getting to help put things into perspective.
When should a buyer sign the Buyer’s Exclusive Agency Contract?
Though there is no set time by which a buyer must sign according to Indiana’s new buyer agency agreement law, the NAR settlement agreement proposes that MLS participants acting for buyers would be required to enter into a written agreement with their buyers before touring or showing a home. Under Indiana law, a buyer broker agency relationship could begin before a home is shown (like when a real estate agent assists a buyer obtaining a preapproval).
How much do I have to pay a buyer broker?
The amount of compensation in the buyer agency agreement must be definite and not open-ended. It is a fee that will be agreed upon by you and your chosen buyer broker at the time of executing the Buyer’s Exclusive Agency Contract.
How long am I committed to the Buyer Broker I have hired once I sign the Buyer’s Exclusive Agency Contract?
The duration and specific property to which the contract applies can be negotiated between the buyer and buyer broker. If after the buyer is shown the specific property and a relationship between the parties progresses or develops, the contract could be amended and the terms changed if both parties agree.
What if I cannot afford to pay a Buyer Broker?
The Buyer’s Exclusive Agency Contract is a financial obligation that is triggered by the purchase of property, due at closing. The Buyer Broker may negotiate the seller’s payment of the buyer’s closing costs, including a buyer’s exclusive agency contract. The buyer must request payment of this contractual obligation.
What if I don’t want to sign a Buyer’s Exclusive Agency Contract?
A buyer cannot be forced to sign this contract; however, MLS policy will require that Buyer Brokers enter into written agreements with their buyers before touring a property. So, if unsigned, a buyer’s access to properties will be limited.
How does this affect my interaction with an agent holding an open house?
If a listing broker is holding an open house and potential buyers enter the open house, the buyers are customers. A listing broker’s agency relationship is with the seller. If a buyer approaches that listing broker and would like the broker to represent him or her by making an offer on that property or asking to see the home again, the buyer and broker would need to execute a Buyer’s Exclusive Agency Contract. Additionally, in this scenario, a limited agency agreement would also need to be executed as the broker is also a listing broker on the property.
Can a Realtor provide an unrepresented buyer IAR forms to make their offer?
No, unrepresented buyers must use their own legal form to submit an offer.
This is just the tip of the iceberg, friends. There are so many different scenarios that can and will play out in the days, months, and weeks ahead. When it comes to hiring your Buyer Broker, spend some time doing your homework. Find out what services that broker is going to provide to you for the cost of their professional fee.
And of course, if you have any other questions, please reach out. I’m here to help as we navigate these new waters together.
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