I have held off for a long time in regards to the NAR settlement and New Policy changes, because I wanted to make sure that I had all the facts before sharing with you all.
If you are not aware there was a pretty big lawsuit that happened over the course of the past year that has rocked the boat for many Brokerages and individual REALTORS. This lawsuit came about because clients were feeling like they were being taken advantage of and not given all of the information before they were asked to sign contracts, and in most states the contracts don’t exist at all. While I do not know all the ins and outs of how that came about, I do know 2 things: 1 My brokerage Beiler-Campbell REALTORS had zero complaints filed against us throughout this process and we were never named as a brokerage that was at fault. 2 Here in PA we have had a Buyer Agency Contract (BAC) since the 90's that spells out everything that a potential home buyer will need to consider, negotiate and agree upon with their REALTOR before submitting an offer on a home- and if you have worked with me before, you know I bring this up when we first meet every time, so that no one leaves our first meeting unsure of a timeframe or a payment structure and everyone is fully aware of their rights and responsibilities from day 1.
Now, as a result of this lawsuit, the National Association of REALTORS (NAR) has released some policy changes and new forms that will take official effect August 17th. These new forms however have been available since August 1st, and both my Brokerage, and myself have decided to adopt the forms prior to August 17th so that we are using the most accurate information and to save our clients form having to sign everything twice. There are quite a few changes being made so I have split this into 2 parts.
Last week I released part 1 which focused on policy changes. This week you have part 2 which focuses more on form changes. If you have not read part 1, I highly suggest you do so first, because the form changes, we are going to talk about in this part 2 are all related to the policy changes we spoke about in part 1.
1. The Notice of 2024 Policy Change Form NPC
This is Brand new form. Anyone buyer or seller who has a current Buyer Agency Contract (BAC) or Listing Agreement (XLS) and a settlement date after August 17th will have to sign this. This form lists out the 4 changes to the MLS: 1cooperating compensation no longer listed on the MLS, 2 Seller assist now being called seller concessions and being given extra detail lines on the MLS, 3 Buyer Broker Contracts needing to be signed prior to showing any properties, (see part 1 for more details) and 4 There are new contracts available with new language reflecting all the new changes.
All of these changes are things that your REALTOR should have gone over with you from day 1 for the most part so when they present it to you and ask you to sign, it should not really bring up any need to change anything to your existing paperwork. However, if for some reason your REALTOR did not make you aware of your rights and your ability to negotiate your contracts, you will have the right (and your REALTOR the obligation) to see and rewrite your BAC or XLS with the new forms and new terms.
This form is here to make sure that everyone with a current contract with a REALTOR is 100% fully aware of all the changes and the rights they have as a client working with a REALTOR.
2. Cooperating Broker Compensation Agreement CBC
This is not a new form. It has been around for some time, but in the past, it was not always used for every transaction, and there have been a few modifications made to the language. From here on out, it will be used for almost all transactions. NAR is asking that it be used with any transactions happening between 2 REALTORS from 2 different Brokerages (but if you work with me know that I will be using it for any transaction with any REALTOR other than myself) in order to have written proof of the cooperating compensation (or co-broke) being offered. The buyer side of a transaction will want to have this signed before submitting the offer, because without it there will be no documented proof of what the co-broke is and you as the buyer won't know for sure what the costs at settlement will be.
As a buyer, your REALTOR should provide you with something called a Buyers Estimated Cost sheet before you submit an offer, so that you know before submitting any offer what your costs will be at settlement based on the terms of the offer you are submitting. Since however, the co-broke is no longer allowed to be advertised on the MLS (see part 1) there is no longer written proof of what the costs to the buyer will be. Because of this, this document will serve as that proof from here on out.
Luckily for buyers and sellers, you will not ever have to sign this document, so not to worry, this form is not one of the additional ones for you. On the flip side, having to fill this out and get it signed by both REALTORS prior to providing you with your cost estimate and submitting your offer, will make the process of submitting your offer take a little longer since your REALTOR will have to take this extra step prior to doing so.
3. The Standard Agreement for the Sale of Real Estate (ASR), Exclusive Buyer Agency Contract (BAC), Non- Exclusive Buyer Agency Contract (NBA), and both the Exclusive and Non-Exclusive Listing Contracts (XLS) have each been modified in order to reflect the new wording and clarification of negotiable sections. Even if you have a current contract with a REALTOR, and
4. even if you do not have any changes you wish to make to your current contracts, you may still be asked by your REALTOR to sign the new contracts with the new verbiage.
If you want to make sure that the contract you are receiving is the newest version, you can check at the very bottom of the contract for the copyright year. The new contracts will read “COPYRIGHT PENNSYLVANIA ASSOCIATION OF REALTORS 2024” If the date is 2023 or prior, ask for a new form. If the date is 2024 and beyond then you have the correct and most up to date form.
There are probably more policy changes and forms on their way from this settlement although they have not been announced yet, and the DOJ has made it clear that they will be following up on all the new forms and policies and expanding on them as time goes on to ensure that clients are not taken advantage or feel taken advantage of again. For now, this is what you will need to know if you plan to work with a REALTOR.
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