So You Need a Buyer’s Agreement?

By Anne Elise Doise | Industry Topics | Comments are Closed | 25 June, 2024 | 0

The NAR entered a settlement agreement to release NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all REALTOR® MLSs, and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion or below from liability for claims brought by home sellers and their issues surrounding broker commissions. Though the NAR still vehemently refutes the claims brought against them and some larger brokerages, they entered the agreement with the goal of preserving consumer choice and protecting members to the greatest extent possible. With the settlement comes a few changes. At the forefront, and notably for REALTORS® in Louisiana, is the requirement that all agents must have a buyer’s agreement signed prior to entering and touring a home with a buyer client. If you are a member of the Realtor Association of Acadiana, you will need a buyer’s agreement to be signed by your buyer clients on or prior to July 15, 2024.

1) So where does this buyer agreement come from?– At this time, there is no standard buyer’s agreement drafted for use in Louisiana. It is hoped that LREC will issue a standard form or forms that meet all the requisite requirements per the NAR settlement. So in the meantime you have a few options 1) get one from your broker, 2) draft your own and have it approved by your broker, or 3) contact LREC for guidance or samples.

2) What must a buyer’s agreement include?– Per the NAR Settlement FAQs, there are four provisions that are required to be included in your buyer’s agreement.

A specific and conspicuous disclosure of the amount or rate of compensation the Participant will receive or how this amount will be determined, to the extent that the Participant will receive compensation from any source.
The amount of compensation in a manner that is objectively ascertainable and not open-ended.
A term that prohibits the Participant from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer (you cannot get paid more than what your buyer’s agreement states even if a seller is offering you more compensation); and
A conspicuous statement that broker fees and commissions are not set by law and are fully negotiable.

3) What else can or should a buyer’s agreement include?–

The relationship you have with the buyer. Does it create an agency relationship (LSA-R.S. 9:3891 et.seq), transactional relationship, or customer relationship?
Who the designated agent is and whether the broker may appoint a substitute agent for the buyer.
Duties you will perform for the buyer. Will you locate the property, negotiate the terms, promote their best interest, and perform other “ministerial acts”.
Duties of the buyer when entering the agreement such as working exclusively with the Broker during the term of their agreement, seek independent expert advice as needed, timely comply with reasonable requests of Broker etc.
A dual agency provision.
Limited liability provision to protect the Broker.

4) Make sure it is signed and dated by all parties – The date and time a buyer’s agency agreement is signed will become of paramount importance. If there is no proof that you had a buyer’s agreement signed before showing a home, you will not be entitled to any commissions or compensation agreed upon. The buyer, agent, and broker should all sign the agreement.

5) A Buyer’s agent can only be paid what is negotiated in the buyer’s agency agreement – Please be cognizant of this new requirement. If you agree to represent a buyer client for 1 apple, you are only entitled to 1 apple EVEN if a seller is willing to pay you 3 apples. You CAN renegotiate your buyer’s agreement with your buyer client, but be wary of the ramifications and your reputation when trying to seek MORE compensation.

Remember, everything is negotiable!

Once you get your ducks in a row, we would be more than honored to assist you and your client reach the closing table. Many title companies and lenders may now be requesting proof of compensation through the Purchase Agreement, Buyer’s Agency Agreement, and Listing Agreements – so be prepared to have those documents ready to send. For further information, please visit the NAR Settlement FAQs. See you at the closing table!

*Disclaimer: This blog article is for informational purposes only and is subject to change as things evolve. Please seek final approval of buyer’s agreements and advice from your local broker, the LREC, and the NAR Settlement FAQs.

Anne Elise Doise

Attorney At Law

337-235-0047

aedoise@primetitle.net