The NAR Settlement Changed More Than Compensation Rules
What DC Home Buyers Should Know About Touring, Open Houses & 'Ministerial Acts'
Fall Of Confusion
DC Metro home buyers entering or re-entering the market this fall will find that mortgage interest rate cuts and broker compensation mandates aren’t the only changes they’ll encounter in the home purchase process for the foreseeable future.
New rules for touring homes are now in place, visiting open houses may feel different, and the options for ministerial acts agents may provide to unrepresented buyers may become increasingly limited. That’s on top of the already-discussed ad nauseam changes to buyer broker compensation procedures.
Here’s what you need to know if you’re planning to purchase a DC or NVA home this fall or winter.
Buyer Broker Agreements
As most prospective homebuyers are now likely aware, August 17th ushered in changes to real estate practices as a result of NAR (National Assoc. of Realtors) class action settlements, MLS participants now require a signed agreement before an agent can show homes.
Is that totally new? No. But while NAR has long recommended that agents obtain a signed agency agreement prior to performing any work for a home buyer, the practice is no longer optional. All MLS participants working with buyers are now required to have a written buyer/broker agreement of some type prior to initiating home tours. This applies to NAR members, and other real estate agents.
Compensation
The new version of the DC buyer agency agreement (BAA) calls out buyer broker compensation requirements, prompting buyers to make decisions about broker compensation before signing. Ambiguous entries such as “TBD” or “Negotiable” are not permitted.
In addition, various addenda and additional forms have been created to make abundantly clear to buyers that payment of buyer broker compensation is their responsibility. Agents must discuss options for compensation payment with prospective buyer clients.
A copy of the current Buyer Agency Agreement for District of Columbia, issued by GCAAR this July. Be aware that forms may be changed or updated.
In addition, there are various accessory documents applicable to buyers and sellers pertaining to broker compensation options.
Review Rules & Documents Carefully
Open Houses
When is it not necessary to have a written broker agreement in place before touring a home? The open house.
The only exception to the requirement for a signed agreement prior to touring any MLS participant-listed home is attendance at an open house. Vistors may be required to sign a disclosure or disclaimer upon entry, as open houses are private property with limited access permissions.
Buyers should understand that the hosts of open houses are typically agents interested in meeting buyers who have not yet chosen an agent. They are not experts on the homes they host, and they must comply with restrictions pertaining to answering questions and providing information sans a written representation agreement.
What does that mean for unrepresented buyers? Without an agreement, these agents may not ‘work with the buyer’. That means few to no representations or insights, limited answers to questions, and zero advice. Interactions should be limited to providing collateral, pointing visitors to sources for more detailed information, and pitches for buyer representation.
According to NAR’s definition of ‘working with the buyer’, without a representation agreement being signed, listing agents (or their open house proxies) are permitted to:
- Provide access
- Answer general questions
Ministerial Acts
“Ministerial Acts”, are defined by DC code as:
Those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee’s own judgment.
Code of the District of Columbia | Real Property
§42-1702
Para. 8A; Subchapter I. General §§ 42-1701 – 42-1709
Disclaimer
The content of this page is provided for informational purposes only, may be limited in scope, and is subject to revision without notice. It should not be construed as legal advice, nor applicable to all situations. Rules and practices relating to NAR settlements are evolving. We are not able to interpret law, or DC codes, as they relate to specific acts. Always consult a legal professional for advice on matters related to laws and the interpretation and application of legal statutes. Commentary is the opinion of the author only.