Starting January 1st of this year the new Washington State Home Buyer Agency laws have taken effect. There are new forms and processes. And it is going to be one of the biggest changes in our industry in a generation. Basically how we operated with buyers has been the same since the 1990s. These changes are going to impact homebuyers the most. You need to know what to expect and how to navigate this new process if you are buying a home in Washington.
What is in the New Buyer Agency Agreement?
It is now mandatory that a buyer’s broker has to have a signed Buyer Agency Agreement before doing any type of buyer services (showing a home, consulting a buyer). The buyer ALSO has to have received (see above) the Real Estate Brokerage in Washington pamphlet before signing that agreement. In other words, they need to know what their rights are as a consumer of real estate services.
Here is What is In the Buyer Agency Agreement:
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- The Term of the Agreement. How long are you and this broker going to work together?
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- Names of The Buyers Representing Brokers. The Name of the Broker or Brokers appointed to act on behalf of the buyer.
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- Exclusive or Nonexclusive Agreement. Determine if the agreement is exclusive (only working with one broker) or nonexclusive (working with multiple brokers).
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- Dual Agency – the broker can represent the seller and the buyer at the same time.
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- Just a note on this. Knox Real Estate Services does not allow dual agency. We believe it is near impossible to fully represent the buyer while fulfilling our fiduciary duties to the seller to get them the highest price for the home.
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- Dual Agency – the broker can represent the seller and the buyer at the same time.
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- The Terms of Compensation. Basically, how is the buyer’s broker going to be paid for their services?
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- Seller Compensation Offer. The seller may offer compensation to the buyer’s broker. This section covers what to do if the compensation is the same, more, or less than what was agreed to with the buyer.
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- Compensation Terms. This section goes over the terms and conditions of the agreed-upon compensation. Go over this section in detail with your broker and make sure you understand the details.
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- Showings, Listings, and VA Financing. You, the buyer, and your broker can agree to not show any homes that are not being offered some form of compensation by the seller. This section of the agreement also gives the buyer the option to say I do not want to see any houses that have views, are townhouses, don’t qualify for conventional financing, etc…
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- Inspection Recommended. Buyers are responsible for doing their due diligence. Washington State is a buyer-beware state. You are responsible for the actions you took while buying a home to do your own due diligence.
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- No Distressed Home Conveyance. Basically, you cannot take advantage of someone who is having to sell their home under duress as a result of a foreclosure or short sale.
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- Fair Housing. Washington State has one of the most detailed laws on who is covered by Fair Housing laws. Housing cannot be denied to people who are considered a protected class.
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- Attorneys’ Fees. The buyer and the seller are more than welcome to hire a lawyer to review this document and any part of the transaction. We often encourage our buyers to have a conversation with a real estate lawyer. Especially if we are in a tricky transaction, for this section, this form goes over what happens in case you have to take this agreement to trial and who pays for those fees.
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- Other. This is open for the buyer and the buyer’s broker to review and add other terms to this agreement. Mind you real estate brokers are not allowed to practice law. This has to be a limited section.
How Do You Cancel the Buyer Brokerage Services Agreement?
Good question! Right now there is no form that clearly rescinds a Buyer Brokerage Services Agreement between a buyer and a buyer’s broker. Keep in mind, you agent has likely performed work for you and has to agree to rescind the agreement.
Buyer Beware
The Buyer may owe the broker compensation at the time of closing on a property that was brought to the attention of that buyer by the broker. Let’s say you just wanted to see a house really quick and you inquired on Zillow or Redfin. Those brokers have to have you sign a Buyer Brokerage Services Agreement in order to show you that property. But you decided to use your original broker to write up the transaction. You might owe compensation to the Zillow or Redfin broker because you technically used them to show you the home when you have an agreement with somewhere else.
Our best advice is to have a conversation with your broker about how to handle these situations.
Knox Real Estate Service is dedicated to help you maneuver the Washington Real Estate market. We can refer you to attorney, inspectors, amazing local lender with 30+ years of experience is part of our team, septic companies, well companies and more.
Reach out: WashingtonHomeHunt@gmail.com 253.380.1915