00:00:00:00 – 00:00:31:12
00:00:31:12 – 00:00:53:22
Unknown
All right. We are excited to welcome back Addison Russell with Farrah Bates. And for exa we’ve invited Addison back because since August the 17th we have had so many questions that have popped up since the practice. Changes have started. Before we get to that, though, we’re excited to announce we have a name for our podcast, oh, My Old Tee.
00:00:54:00 – 00:01:12:19
Unknown
So, Addison, what’s in your t? So my t of choice is like a fruity T non caffeinated. I’m very sensitive to caffeine. With some honey. I don’t know, what’s your t of choice? You know, I like green tea or jasmine tea, I like straight, I don’t have to have anything in it. Nothing sweet, nothing at all. I love it straight.
00:01:12:19 – 00:01:33:00
Unknown
I like honey, it’s just when I’m sick, you know? Oh, yeah. Kind of cold. Oh, yeah. But I do like it. I like the honey when I’m sick. You’re right. But. Okay, let’s jump into that. So you have received a lot of questions. We’ve received a lot of questions. And I think everyone is just trying to make their way through these changes.
00:01:33:02 – 00:02:01:10
Unknown
We’re seeing a lot of compliance. I will say. Yeah, but I know you’ve had a lot of recurring questions. So let’s jump into them. What are some of the things that you’re seeing, but particularly with open houses? So open houses has just been such a common question. And I think that the first question I was getting, people seem to wrap their mind around that was if I have an open house and buyers come through, do I need to have them sign something?
00:02:01:10 – 00:02:20:20
Unknown
Because part of the settlement agreement was you need a written agreement with a buyer before touring a home, but that’s if you are working with the buyer. So if you are working for the seller, whether it’s your own listing or you’re doing an open house, you’re talking it. You don’t need something in writing with those buyers that come through the door.
00:02:20:22 – 00:02:45:11
Unknown
You’re working with the seller and Nar does a really good job of addressing that. And they’re Farkas. And so I think people have kind of wrap their head around that. And that question seems to be recurring less and less, but that there’s like a sub question to that. When is will if I’m the listing agent and there’s another agent in my office hosting the open house for me, or maybe they’re showing one of my listings because I’m out of town, then what does that look like?
00:02:45:13 – 00:03:10:19
Unknown
So my interpretation has been and caveat this is my interpretation. But that you’re still working with that other agent is still working with the seller. They’re, they’re they’re on behalf of the seller. So they don’t need a written agreement with that buyer. But they probably do need something in writing with the seller that’s giving them permission to be in the home, to be showing the home, to be working on their behalf.
00:03:10:21 – 00:03:28:12
Unknown
And then also that shores up that relationship that you’re not working with the buyer. But that’s been a really common question. And, you know, the flip of that is if you’re a buyer’s agent and you’re out of town, but your buyer wants to see a house, then yes, the buyer does need something in writing with that other agent.
00:03:28:12 – 00:03:45:16
Unknown
Just because they have a like an agency agreement with you may not extend to other agent. So it’s something in writing to satisfy those requirements. So to make it clear, if I’m the buyer, I come into an open house just because I see an open house sign and I go, oh, that house looks great, I’m going to go tour the house, right?
00:03:45:18 – 00:04:05:11
Unknown
Just walk through. I don’t have to sign anything when I come in. Now, you can just be a Wookie, Lou, all day long. You don’t have to sign anything. You shouldn’t be expected to sign anything at that point. But if I come in and I’m looking around, strike up a conversation that conversation leads to. So what else can you show me?
00:04:05:13 – 00:04:30:02
Unknown
That’s where. And that’s important for both the buyer and the agent that’s there to understand that. Okay, maybe our relationship is shifting. And if I’m not going to go show you listings that I have, I’m going to show you other people’s listings. Then I’m working with you, mister buyer now. And I do need something in writing that’s going to say, hey, here’s what my services are worth and here’s who I expected to be paid from.
00:04:30:04 – 00:04:54:13
Unknown
And those are those are the two things that need to be addressed. Right? Makes perfect sense now. Now. Okay. Yeah, this is different. But, you know, I think that you just get your mind set on it and it should work out fine. Yeah. And then the other is really just disclosure is disclosure to the seller who’s sitting in the house, who’s working for you at the time and making sure everybody knows who’s on first base.
00:04:54:13 – 00:05:16:23
Unknown
Right. Yeah. Right. You don’t want a seller to show up and be like, who are you? And why are you at my house? In my house, right. All right. So then another question that you are receiving has to do with, compensation and, disclosing or not disclosing, that, that compensation when it has to do with the buyer’s broker.
00:05:17:02 – 00:05:36:05
Unknown
Yeah. So talking about cooperating compensation because another part like we we’re hitting on the two biggest parts of the settlement right now. We’ve I talked about written agreements. And now we’re going to talk about the removal of compensation from the MLS. Right. So that was you know, such that was the tool of communication prior to the settlement agreement is you would have a listing agreement.
00:05:36:07 – 00:05:56:03
Unknown
You would agree with your seller on what their cooperating compensation would be, or, you know, they would not be and you would post to the MLS. Well, now, as we talked about in our last podcast, a buyer broker is maybe having to call the listing agent to find out if there is cooperating compensation, what it is, or text him or email, or, you know, other mediums.
00:05:56:03 – 00:06:26:21
Unknown
Right. And so some feedback that I have been getting is that maybe you call listing agent and the listing agent says, well, it’s negotiable or just put it in the offer. I’m not going to disclose it. And the question to me has been, is that appropriate? And so if we if we look at it from the standpoint of you as a listing agent, have had a conversation with your seller, you have agreed to said, this is what my services are worth.
00:06:26:23 – 00:06:49:14
Unknown
You know, would you seller like to offer some of this as carpeting conversation to a buyer broker? If you and the seller agree on a number, you fill in the number on your listing agreement. The listing agreement gives you express authority to communicate that offer of cooperating compensation. So I don’t see any reason to withhold that information.
00:06:49:14 – 00:07:13:08
Unknown
You’ve gotten the authority that you need to communicate it. I think that some, you know, other claims could be made about that, but I think that it’s important we’ve been expressing this whole thing about communication, and that’s how we’re going to navigate this is effective communication with clients and effective communication with other brokers. So I think disclosing that cooperating conversation amount that you’ve agreed to is the best practice.
00:07:13:10 – 00:07:31:10
Unknown
And you have the authority to do it within our forms. And as you said to me earlier before you were putting it in the MLS. Right. And so you, you know, it’s no different, like you agree to that pre settlement, you and your seller had the conversation and then you were putting in their notice. That was how you were communicating it.
00:07:31:10 – 00:07:59:17
Unknown
And now you’re you just have other ways to communicate it. But but there’s no reason to stop communicating it. I will say I don’t want people to hear this. And then they call listing agent, and the listing agent says, well, it’s negotiable. That may be an appropriate answer. If in your listing agreement, you and the seller agree to put zero as cooperating compensation, but maybe your seller says I would be willing to accommodate a buyer broker, depending on the terms of the offer.
That’s when a listing agreement or listing agent can say, we’ll put in an offer and it’s a negotiable piece because it is a negotiable piece like you haven’t. You know, there’s not an agreement set to in the listing. And that makes sense. Yes, that makes sense. But if I’m a seller who says, bring me all offers, yes, I’ll pay.
And then I need to. Yes. Yeah. If you already had that conversation and it’s just it’s going to help you. To me it seems like it would just help you navigate transactions anyway. It’s one less thing. If you’ve already had that conversation with your seller, it’s one less thing that everyone else has to worry about. Like, okay, we got that piece figured out.
Now let’s let’s talk about price. Let’s talk about other concessions, and kind of go from there. Right. And the, the concessions that you’re seeing, are you getting questions on concessions? I actually am not getting a lot of questions on concessions. I think maybe most of those are going to the MLS. With the new concessions field, I’m not seeing a lot of questions on concessions.
Let’s get it. Yeah, let’s get data. So handling the comp the comp zation in the purchase and sale agreement, I know that’s another piece that you’re getting questions on. It is and set. Well, I think because the forms committee did put out a special stipulation, to where you can put as part of your offer seller to pay X or X percent to buyer broker at closing.
And that’s sort of a new concept really in our forms. And I pre settlement, honestly, if you’ve heard me speak, you probably heard me say that the purchase and sale agreement is not the best place for broker to conversation to be discussed, because you’re not a party to the contract, you are a third party beneficiary. But, you know, I think that we wanted to give the special the form to we wanted to give this special stipulation as a tool to be used if needed.
And so I’m going to try and break it down in kind of a long answer and hopefully not. I’m going to create less confusion rather than more confusion, but we’ll see. So if if I call you the listing agent and you tell me that there’s cooperating compensation and it’s the agreement, it’s an amount satisfactory to me and my buyer, then that’s so great.
We’re going to complete that cooperating compensation form. We’re going to get that signed, and then my buyer’s going to submit an offer. And that doesn’t have to be a part of the offer. If there’s no cooperating compensation. But my buyer needs the seller to, to cover some of that in order to pay for the house, they’re going to use the special stipulation for that purpose.
Also looking at it from a holistic view, if you’re offering cooperating compensation, but it’s shy of what I’ve said, my services are worth. The buyer can negotiate for that difference within the purchase and sale agreement. So in that situation, you can use the compensation agreement and the special stipulation. And they’re going to work together. They’re going to be totals.
And so kind of on that note, there was a question that ran in the digest this week that came through the hotline and it said, well, if we have a compensation agreement signed and it’s it’s satisfactory. Then satisfactory, but then it’s also include there’s also that same amount included in the special stipulations of the contract is at that point, the seller not only giving, you know, all the corporate translation already agreed to, but then contractually obligated to pay that additional amount to the buyer broker.
And the answer in the digest was yes. And that’s true because those two, you know, they’re not inclusive, like they work together. They can be added up. But what the digest but I failed to say in the digest response was that remember that we there’s a cap on compensation. So whatever you agree to with your buyer is the max you can receive.
So in that situation, if you had to legally binding agreements, it’s just going to create a little confusion at the closing table, because they’re going to have to be amended to work that out where you’re not getting more, because per the settlement, you can’t receive more than what you told the buyer your services were worth, if that makes some sense.
But there’s some questions I think that we hear from time to time is, can you go back and amend that? Once you put a cap, can you actually go back and have everybody amend it to say, I can get more? So I have been just pointing every question to that. There’s a really helpful FAQ on and noise facts dot realtor.
I think it’s actually number 74 is how often I’ve kind of referred people to you. And, and it may not be 74 tomorrow as a change, but, and it says that a buyer rep agreement can be amended at any time, just as any other agreement can be amended at any time. But you can’t you have to work in good faith at the settlement.
And then there are some other caveats about working in the best interest of the consumer. And what does that look like? So an example of bad faith would be if I’m having a my buyer consultation with you and I say, oh, just put any number in that blank of what my fees are and will amend it based on what the seller is offering in cooperating conversations.
Well, that’s bad faith. That’s not you having an honest conversation with the consumer about what your services are worth. So don’t do that. That’s not in compliance with the settlement. But then apart from that, I just refer back to that in our FAQ for right now. Okay. So since you mentioned some forms that our members are using, are there other forms that they need to be aware of or that are important that they understand or you’re getting questions about?
Yeah, I think the biggest form changes we did. And again, like nothing changed drastically, but just forms that members need to be aware of. If you have a listing agreement dated prior to August 17th, which was the date of the practice changes, you need to have a compensation disclosure form filled out. It’s RF 603 and that just says compensation rates are not set by law in our negotiable.
We had a similar term in our listing agreement. But it wasn’t verbatim. So after talking to it in our, they said, well, I think the verbatim language we’ll just cover, make sure that our members are covered to the fullest under the settlement, and so get that compensation disclosure signed in that works for listing agreements, that works for agreement to show property with Fizemos.
And then that works if you’re acting as a facilitator with the seller, because that that was the only piece where our current listing agreements were not in full compliance. Buyer rep agreements prior to August 17th, there is an amendment to the buyer rep agreement that you’ll need, and it rewrites the compensation section because previously we allowed licensees to just receive whatever the seller was offering or cooperating compensation was being offered.
We didn’t have an objectively ascertainable amount so that that’s important to get that amendment signed. And then, but on those to you before August 17th, if they’ve entered into a contract, you don’t have to worry about that. And if it’s post August 17th, then use the new forms that are dated August 17th. So those are really the two the big things I would focus on there.
And we did create a written agreement before touring a home. RF 143 if you want to practice a facilitator status with a buyer, and that will give you that written piece to be in compliance and to clarify, it’s it’s gone under contract. So if you have something that’s pending gone under contract, they don’t have to go back and get it correct.
You don’t need the amendment. But I think if you fall out of contract then you probably would need the amendment of that for whatever reason. Now, I said, if it’s gone under contract, then you’re okay. And we do have some companies that we’re aware have done their own tour agreements. Which is fine, because our contracts are certainly not mandatory.
But, but we do have some concerns that some have not met the Nar or the settlement requirements in those forms. So they can go to the Na site and get exactly what they have to have. There are certain things that have to be in those agreements, and it’s all in the settlement agreement. So companies that are that are working to create their own, I really, really hope that they’re working with an attorney.
I assume they are, but can read the settlement agreement and it lays out what, what needs to be there. But then you also have to take into account, like the brokers act and track rules and code of ethics and, fair housing laws. And so making sure that all that’s covered in one page, we try, I tried and it wasn’t as easy as I wanted.
So right, there’s a lot there’s the other thing I’ll say while you’re on the topic of forms, is that the, Forms Committee, which is made up of members and attorneys, they’re an advisory group. Then it’s the attorneys that write it. But any member that has suggestions, as they’re using the forms, they can send those suggestions to our email address, which is forms at T and realtors.com.
And you all do take a look at those. Yeah definitely. And and that’s why the forms Committee exists because they are members using the contracts on a day to day basis. Like I can write a contract, but you know, when you’re in the middle of a transaction and something pops up and you’re like, oh, our form didn’t contemplate this or I don’t read the form limited in this circumstance.
And that’s what the feedback from membership is really helpful. Or there’s this changes or their practice changes or law changes or all the things that so let’s talk about if a member were to run up against a client or a customer that just refuses to sign these agreements, what do they do? And where I should have it, I’ve heard that feedback, especially from, I think, from a buyer who kind of says, like, they call you Angela on Saturday mornings, like, hey, there’s this house on the street.
Would you show it to me? You know, like, yeah, I would love to you. I’m going to need you to sign this form first. And then they’re kind of like, I don’t know how serious I am about this. You know, I don’t really want to sign anything yet. That’s probably going to happen. And so for in our members, you just have to refuse to work with that customer, unfortunately.
But that’s for our members protection. You know, it’s not to their detriment. Because if you’re not part of the settlement agreement does cover all individual and are members, but you also have to be implementing the practice changes. So if you’re not complying with the settlement agreement, you will lose the protection of the settlement agreement. And that’s what the whole thing was about.
It was to protect from future lawsuits. So, you know, it’s not just like these are rules that are no fun for the for the purpose of being, you know, no. Fine. It’s just that they’re affording protections, right? That you’re following the rules. It keeps you from being sued in the future. Right. And you can do a one day, one time agreement.
It doesn’t mean that you have to represent them for every showing the future. The great thing, I think, na has done to help is they have these resources that are also available on Fox dot realtor. And it’s one sheet that explains things to the consumers that members can use, that they can either give to that consumer or they can put it out in advance so that the consumers understanding what’s happening as well.
So, definitely our members should check those out. And I think I’ve heard this as an example, but as an attorney, like I don’t do any work with anyone before I get an engagement letter signed because I want you. That’s our practice. I want you to know what it’s going to cost you. I want to do all this work, and then someone say, whoa, that was a lot of money.
Yeah, I’m not paying you. Yeah, like I want to. And that’s also another way it protects you is, like, on the front end that you get that protection. Doctors too. There’s so many different purposes. Yeah, yeah. The last thing that, that I’ll ask about is we’re also getting the questions from MLA is about who’s enforcing this.
And so, when we make sure they understand is the MLS who is enforcing these agreements. Are you getting those questions as well? I do, but and I get those more so in like group speaking rather than like individual questions coming to the hotline. But yeah, I mean it’s it’s then a lot. So I think that every MLS maybe different in how they approach things and the, you know, the policies that they put in place, I think it’s important for the members to understand as well as the MLS is is that they too are covered under the settlement, and if they aren’t enforcing the rule, they lose their privilege and being protected as well. So the MLS needs to come up with a policy on how they’re going to enforce it, hopefully educate the members and then make sure that they are, following through. So please make sure you’re following the rules so that they don’t have to create fines or whatever they choose to do to enforce this, but it is their job to enforce the, one of the big questions that we had come up is, are they able to create some sort of system whatsoever to upload blank documents that compensation documents and stuff?
Are they able to do anything like that where, you can then fill that out and send that back? So no, no, and I think the first, you know, you know, I probably I did the same questions, the first kind of question is, can I put up a competition agreement that has an amount in there?
Oh, no. That was like a clear no. And then it was like, well, can I put up a blank compensation agreement, which would be an indication of I am willing to pay cooperating opposition. And so after conferring within are then. No, that’s it’s just we’re trying to avoid obviously any reference to compensation within the MLS. Right.
That was that was a big part of the settlement. Agreed. Right. And all of those things are going to get not only the member but the MLS and troublesome. You know, and the last thing I’ll say is we as we kind of come to the end of our time is that there are so many opinions that are out there in these news media outlets on the speaking circuit, so many people that are wanting to take advantage of this situation get their name out there.
And I cannot stress enough to be careful who you listen to. Be careful who you follow. Be careful who you trust. And for our members to know the facts yourself, because your consumers are hearing all that stuff too. And so, you know, the more prepared you are to address their questions, the better it will make everything for everyone.
And to that, now be careful what you post, because if you’re posting the bad information, the consumer is reading that, I just cannot stress that enough. It is, industry that people follow and we see it all the time. All these new names popping up that want to weigh in and give their opinion, and they’re not even in the industry
I just want to say, please be careful who you follow. Go to the source, the people who are involved in the suit, that is your experts. And I cannot stress that enough and I agree, I agree, but, well, I want to thank you again. Well, thanks for having me back. So I guess the first one wasn’t like terrible.
No. I definitely want to thank you for, coming back and doing this for us because I don’t think we can get enough information about this, practice change out there. And we again, appreciate you being available on the legal hotline and all of the times you’ve gone out speaking, answering questions and and just being there for the membership.
I think we’ll have much more to talk about as, as the weeks and months unfold with the DOJ with clear cooperation. So it’s it’s really a stay tuned. It’s not a desk is the last conversation.
There’s much more to come. Yeah. Don’t be like, oh, I watched that one podcast and everything and like, so we’ll be back.
