The Mississippi REALTORS® Institute is dedicated to supporting REALTORS® as they navigate the recent practice changes required by NAR’s settlement agreement. These changes are designed to uphold ethical standards, protect consumers, and clarify buyer-agent relationships. Following these updated guidelines can help you maintain compliance and build stronger, trust-based connections with your clients.
Dos When Working with Buyers
Clearly Communicate Your Value as a REALTOR®
At the beginning of any client relationship, it’s essential to explain the unique value you bring as a REALTOR®. Unlike other real estate licensees, REALTORS® adhere to a strict Code of Ethics that prioritizes client interests. For an in-depth understanding, consider sharing this consumer guide about how REALTORS’® Duty to Put Client Interests Above Their Own with your buyers. Your commitment includes finding a home that aligns with the buyer’s unique needs and upholding ethical standards throughout the process.
Explain the Purpose of the Written Buyer Agreement
Mississippi REALTORS® must provide clarity regarding the written buyer agreement and its importance in the client relationship. This document outlines the services you will provide and the compensation involved, ensuring both you and your client are on the same page before touring properties.
Emphasize that this agreement is a requirement in many MLSs to reinforce transparency and protect both parties. For more insights, check our recent blog on the Buyer’s Agency Agreement Changes.
Discuss Compensation and Buyer’s Financial Responsibilities
Before signing the agreement, explain the financial aspects clearly. While some sellers offer broker compensation, this isn’t guaranteed. Buyers must understand their responsibility for any agreed compensation, as some payments may not be financeable through a mortgage.
Serve as an Advocate for Your Buyer
As a REALTOR®, you’re ethically bound to prioritize your buyer’s best interests. Make sure they understand their options and advocate for the terms that best meet their needs. Mississippi REALTORS® can inform clients about the potential to ask sellers to cover broker compensation in the buyer’s offer, if applicable.
Know and Follow State and Local Laws
Mississippi REALTORS® should be familiar with relevant state and local laws concerning buyer representation. Always consult with MRI or your local REALTOR® association for updates, or the Mississippi Real Estate Commission as state-specific regulations may impact your work.
Don’ts When Working with Buyers
Avoid Misrepresentation in Buyer Agreements
Buyer agreements must be presented with full transparency. Accurately outline the services and compensation, making sure the buyer fully understands the terms before proceeding. Honesty is crucial, as misrepresentation is a violation of NAR’s Code of Ethics.
Don’t Circumvent Practice Change Requirements
Compensation terms in buyer agreements must be specific and transparent. Avoid creating multiple agreements or amending terms solely to match a competitor’s compensation offer. Each agreement must have a clear basis and an informed, consenting client.
Don’t Accept Unauthorized Compensation
Under the new settlement, REALTORS® cannot accept compensation beyond what is specified in the buyer agreement. Avoid bonuses or other forms of compensation from any source unless explicitly agreed upon in the contract.
Protect the Confidentiality of Buyer Agreements
Buyer agreements contain sensitive compensation information and must not be shared with competitors, except where required by state law. Your MLS may perform audits for compliance but should maintain confidentiality.
Don’t Limit Property Showings Based on Compensation
Avoid steering clients based on broker compensation. Mississippi REALTORS® must show buyers all properties meeting their criteria, regardless of the compensation offered. Ensure that clients make informed choices based on their preferences.
Frequently Asked Questions (FAQ)
Why is a written buyer agreement necessary?
A written buyer agreement establishes clear terms of service, ensuring that both the buyer and the REALTOR® understand their roles and expectations. It protects both parties and aligns with NAR’s recent settlement requirements, which mandate transparency and compliance.
What should I include in a written buyer agreement?
A buyer agreement should outline the services the REALTOR® will provide, the agreed-upon compensation, and any other terms that define the client-agent relationship. This document helps avoid misunderstandings and provides a transparent foundation for the working relationship.
How can REALTORS® clarify their compensation with buyers?
REALTORS® should discuss compensation openly with buyers, explaining that while some sellers may offer to cover buyer-agent fees, this is not guaranteed. Buyers should be aware of any potential costs they may incur and discuss these terms fully before signing the agreement.
What are the penalties for failing to comply with the new NAR requirements?
REALTORS® who do not adhere to these guidelines may risk losing MLS access, NAR membership, or even face legal consequences. Following the dos and don’ts outlined here can help REALTORS® avoid potential penalties.
Can a buyer request the seller to cover their broker’s compensation?
Yes, buyers may request that sellers cover broker compensation as part of their offer, though this is subject to negotiation. REALTORS® should make sure buyers understand that this option is available, even if the seller’s listing does not initially offer it.
Is it acceptable to steer buyers based on broker compensation offers?
No. Under the NAR Code of Ethics, REALTORS® must show buyers any property that meets their criteria, regardless of compensation. Steering clients based on compensation is prohibited, as it conflicts with the principles of transparency and buyer autonomy.
Where can I find more resources on buyer agreements and compliance?
Mississippi REALTORS® Institute offers various resources, including in-person and online classes, to help you understand and apply these guidelines. For more information, visit our Course Catalog or contact MRI directly.
Take Action Now for Compliance and Success
Don’t wait until it’s too late. Enroll in our upcoming in-person and online continuing education classes to stay ahead of the curve and continue providing exceptional service to your clients. For further guidance, please reach out to us at the Mississippi REALTORS® Institute. Contact us or call us directly at 601-932-5241. Your success is our priority, and we’re here to guide you every step of the way.