Accurate, useful forms are a paramount piece of your business. Upcoming changes to real estate practices, including the mandatory use of buyer agreements starting July 1 and settlement changes taking effect in August, necessitated updates and the creation of new forms for Iowa REALTORS® members.
Iowa REALTORS® is dedicated to ensuring you have the tools and forms to successfully navigate these changes. IAR leadership, staff and forms committee members have worked behind the scenes to create a buyer agreement form and provide updates to other frequently used forms. These updates have been released on Form Simplicity and Remine and are now available for all IAR members to use.
PLEASE NOTE: As we continue to traverse NAR’s proposed settlement and other industry changes, forms provided by IAR may require additional updates. Please check Form Simplicity and Remine frequently to ensure the use of the most up-to-date forms. We appreciate your patience and feedback as we work to provide members with the tools and resources to navigate industry changes.
Buyer Agreement
Since an initial release in February, the Buyer Agreement has been updated to conform to new state laws and stipulations of the NAR proposed settlement.
The agreement, which was originally marketed as exclusive, is now simply referred to as the buyer agreement. The document now includes a check box denoting that its use is either exclusive or non-exclusive. The decision for usage of exclusive versus non-exclusive will now be a business decision for each member and their brokerage. Additionally, in Section Two (2) of the buyer agreement form, IAR added an initialing line requiring buyers to affirm they have not entered into an exclusive buyer agreement with any other agents. This affirmation section helps to protect members from liability surrounding buyers signing multiple exclusive buyer agreements.
IAR added a termination clause to the Buyer Agreement in the Section Three (3). Now a buyer can terminate the agreement for cause. The contract provides for 72 hours for remediation by the brokerage once notice of intent to terminate is given. If the buyer’s brokerage is unable to satisfactorily remedy the issue for the buyer, the buyer can terminate and void the contract.
IAR changed the compensation section in the Buyer Agreement to comply with the NAR Settlement in Section Eleven (11) by removing the section stating that a broker could obtain higher cooperative compensation if offered. Now, the section states that if the cooperative compensation offered is higher than the negotiated professional service fee in the buyer agreement, the buyer and broker must agree to a higher rate. If the higher rate is not agreed upon, the broker will be paid the initial negotiated professional service fee.
Finally, IAR made minor updates throughout the document, including edits to the duties sections and changes to the assignment section to comply with state law.
IAR recommends removing the previously published EBA from your form library and updating it to the most recent Buyer Agreement. As noted, the originally released EBA is not compliant with the NAR proposed settlement. Further updates to the Buyer Agreement may occur in the coming weeks.
Listing Agreement
IAR has made several revisions to the Listing Agreement. The most notable change is the separation of the various compensation discussions in the document. To better align with the NAR proposed settlement, IAR separated the listing agent compensation section and the buyer broker compensation fee.
Moving forward, a listing agent will input into the listing agreement the specific compensation they will receive for the transaction. The listing agent will then have a separate conversation about offering cooperative compensation to the buyer’s brokerage with the seller/owner. A total fee in which there is a shared percentage will not be included on the listing agreement.
The goal of this shift is to ensure listing agents have a clear conversation related to their compensation for the transaction and a separate conversation about the merits of buyer’s brokerage compensation with a seller/owner. The splitting of these conversations provides clients with a clear understanding of how compensation is paid and avoids potential confusion.
IAR updated the listing agreement with the following changes:
- Added a termination section to mirror the Buyer Agreement allowing the seller/owner to terminate the agreement for cause in Section One (1) with 72 hours for remediation.
- Aligned the protection period to mirror the Buyer Agreement.
- Updated in Section Four (4) to allow owner/sellers to check for cash offers.
- Created Section Five (5) to allow for a different compensation rate for unrepresented buyers.
- Renamed cooperative compensation section to buyer brokerage representation fee. Updated the section to comply with state law and the NAR proposed settlement to conspicuously display that fees are not fixed or set by state law, and are a negotiable element of a real estate transaction.
- Added a dual agency disclosure section.
Agency Disclosure
The IAR Agency Disclosure form was updated with the following changes:
- Language to reflect changes in state law related to terms such as brokerage agreement, removal of agency agreement, and other changes.
- Duties to all parties and duties to client sections to reflect state law.
- Removal of compensation related sections.
Broker to Broker Compensation
The Broker to Broker Compensation form was updated to reflect changes to comply with the NAR proposed settlement. This form is intended to be used between brokers if cooperative compensation is being offered by the seller to the buyer brokerage. It can be used if there is an agreement between both parties on what the cooperative compensation will be between the parties.
Buyer Agreement Cancellation
The Buyer Agreement Cancellation form can be used by members to terminate the contractual relationship between the buyer brokerage and the buyer. It provides checkboxes to indicate the reason for the termination.
Buyer Agreement Amendment
The Buyer Agreement Amendment is a form that can be used to amend the Buyer Agreement if necessary. The two specific sections that are included at this time are related to the retainer period and a section related to compensation. IAR anticipates that the two most common changes to the Buyer Agreement between buyer and broker will be an extension of the retainer period and potential changes to compensation rates or fees to potentially reflect negotiations in compensation. Additionally, there is an “other section” that can be used to make other amendments to the Buyer Agreement as needed.