Want To See A Home To Buy In California? Buyer Representation Agreements Required Starting Mid August Due To Recent Lawsuit

Palm Springs, CA

According to the National Association of Realtors, “beginning August 17, 2024, a buyer representative “working with” a buyer will be required to enter into a written agreement with the buyer prior to touring a home, including both in-person and live virtual tours. ” The agreement in California is called the BRBC Buyer Representation And Broker Compensation Agreement.

The Buyer Representation and Broker Compensation (BRBC) Agreement is a contractual document used in real estate transactions to establish a formal relationship between a buyer and a realtor or agent. The agreement outlines the terms and conditions under which the realtor will represent the buyer in the search for and purchase of a property. It also specifies the compensation the realtor will receive for their services.

This new change stems from multiple lawsuits filed against the National Association of Realtors for alleged price fixing violating federal anti-trust laws. Commissions typically have been listed in the MLS on a listing to let the buyer’s agent know what commission percentage they will receive. Now, due to March 15th settlement agreement after a jury in Missouri in October of 2023 found various brokerages liable for millions of dollars, commissions will no longer be listed in the MLS.

This is because although the National Association of Realtors has vehemently denied doing any wrongdoing, they have proposed a class action settlement banning commissions to be listed in the MLS.

What Does This All Mean For A Buyer?

What this means for the buyer is two fold.

Firstly, in order for a realtor to show a buyer a buyer a home outside of an open house, the buyer will have to sign a Buyer Representation And Broker Compensation Agreement to do so that will list compensation to the Buyer’s agent.. These agreements can be written creatively though so that a buyer does not feel locked in with a specific realtor they may not feel comfortable with yet. Open houses will also have a new set of rules as drafts of these rules are now being worked out by the California Association of Realtors.

Secondly, while in the past the seller has paid out commissions from the proceeds of the sale of their home to both the seller’s agent and the buyer’s agent, the seller can opt out of providing commissions to the buyer’s agent. This is where a Buyer Representation and Broker Compensation (BRBC) Agreement come into play. A Buyer Representation and Broker Compensation (BRBC) Agreement will obligate the buyer to pay out commission to their agent if the seller does not offer compensating commission to the buyer’s agent.

Many industry experts still expect the seller to pay commissions to both their seller agent and the buyer’s agent from the proceeds of their home. This is because many buyers may choose not to purchase a home if they have to pay the realtor’s commission out of their own pockets in addition to making a substantial down payment or paying the full price in cash.

Either way, California Real Estate is about to get more interesting.