Originally Posted by SHPayne
First, as others have mentioned, the new rules are not "law". They are new "rules" promulgated by the National Association of Realtors (NAR) as a result of the settlement of a massive lawsuit, and they apply to members of NAR, which every "Realtor" (licensed real estate agents that are members of NAR) must comply with OR BE FINED. Almost all agents that are "Multiple Listing Service (MLS)" agents are members of NAR.
Second, the new rules do require Realtors to obtain a buyer-broker agreement or buyer representation agreement that sets forth the broker's compensation before they can "show" a home to a prospective buyer. The amount of compensation to the "buyer's agent" is "capped" at what is set forth in the agreement (and is fully negotiable). Buyers can ask sellers for concessions toward closing costs in a contract offer to purchase which MAY be used to pay the agreed upon "buyer agent" compensation. If there are no such concessions offered (or used) for agent compensation, THEN the buyer pays the broker that represented them the full amount. If the seller pays some of it, the buyer pays the broker the difference. NOTE, however, that the agreement between buyer and broker may be modified at any time.
Third, a buyer-broker agreement can be for a single showing, for showing a list of specific properties, or it can be for showing all properties during the agreed upon term of the agreement. Everything is completely negotiable. For those that want the assistance of one agent to help them search everything in The Villages including MLS listed homes, Properties of The Villages (POTV) listed homes, For Sale By Owner (FSBO) homes, etc., and believe in directly compensating such an agent for scouring all the possibilities, these buyer-broker agreements have been in use for a long time. But let's be honest, there aren't a lot of those potential buyers in a market where buyers have, for the most part, not had to pay for these services "out-of-pocket".
Fourth, an agreement is NOT required if a potential buyer is just visiting an Open House and the attending agent is answering questions about the house. However, there is a line where an agreement might be required IF the potential buyer desires to get more representative personal advice regarding the purchase of that particular house or others.
Fifth, a "buyer agent" is not "required" in Florida. A buyer CAN go directly to a listing agent as long as the seller, in their listing agreement, has authorized the agent to work with potential buyers and the agent is a "Transaction Broker/Agent" (more on that later). However, under the new rules, if the listing agent is allowed to work with buyers, verifies that the potential buyer is not working with another agent under an "exclusive" agreement, and takes on the representation of the buyer, the buyer must still sign a buyer-broker agreement. It may still be beneficial financially to do that as the terms are still negotiable, BUT going directly to the listing agent DOES NOT alleviate the requirement under the new rules to enter into a buyer-broker agreement.
Sixth, these rules where seller pays seller's broker, with the "option" of compensating a buyer's broker, and the requirement of a buyer-broker agreement between a buyer and broker/agent have been in place in 18 states BEFORE the settlement. So while this is new in the majority of states, including Florida, it is not new nationwide.
Seventh, these new rules went into effect in our area on August 6. The MLS that covers The Villages counties decided to move early on this and not wait until the August 17 national deadline, so that is why many buyers (and some agents) are being caught a little off guard by this. There is going to be some confusion for a while.
Eighth, as mentioned before, seller's may still offer compensation to the buyer's agent in the Listing agreement, but said potential compensation is no longer allowed to be advertised or shown on the MLS as a "unilateral" offer of a specific compensation to an agent that brings a buyer. This is a requirement of the new rules to make sure that it is clear that compensation is completely negotiable (as it has always been, although THAT has not always been clear to all parties which is part of the gist of the lawsuit). Listing agents CAN advertise that the seller is offering compensation to buyer agents on their websites, on a flyer inside the home, and other places, just NOT on the MLS. If a buyer agent contacts a listing agent about compensation being offered by the seller, the listing agent is required to answer those questions so everyone knows the situation up front.
Ninth, previous to these changes, agents could see the percentage that the listing agent/seller was offering to "cooperating" buyer brokers in the MLS. That information has now been wiped from the MLS. There is a simple Yes/No question as to whether the seller is offering "concessions" and though the amount of the concessions MAY be disclosed, that information is not required.
Tenth, if a seller is offering concessions, it is not automatic. A buyer must specifically request concessions in a purchase contract, and those concessions, if agreed upon, may be used by the buyer for ANY purpose including fulfilling the terms of the buyer-broker agreement. If they don't use the concessions for agent compensation, then the buyer will have to compensate their broker/agent out-of-pocket according to their agreement.
Eleventh, these rules and disclosures now make it very clear that everything is negotiable when it comes to agent compensation on both the buyer and seller side. Again, it has always been negotiable, but THAT has not always been clear and completely transparent. Now, there are new listing agreements and buyer-broker agreements and new "compensation agreements" (if the seller decides to offer compensation to a buyer broker) that clearly state the negotiability of all this. Sellers now have to make a decision as to whether or not they think it is in their best interest to offer buyer broker compensation or "concessions" and at what level. This is not new, but it is going away from the "way things have always been done" where most sellers have gone along with the accepted practice in the market area (also a reason for the lawsuit, the settlement, and all these new rules). If the seller doesn't offer compensation to the buyer agent, it could reduce the pool of buyers. Let me be clear - it is an ethical violation for a broker/agent to NOT show a house a buyer wants to see based on compensation offered (or not offered) by the seller. HOWEVER, it may very well be the BUYER that chooses not to see homes IF they won't be getting any potential assistance to help cover this potential "new" out-of-pocket expense.
Twelfth, agents for Properties of The Villages (POTV) are licensed agents BUT they are NOT members of NAR (thus not "Realtors"), so the new rules do NOT apply to them. We all know POTV doesn't negotiate much, and I have no problem with that. However, that fact and these rules can be good and bad for consumers for a variety of reasons, but I'm trying to keep my opinions and speculation out of this.
Thirteenth, there are three statutory agency relationships in Florida between consumers and real estate brokers and they each have different "duties" of the agent to the consumer (the consumer also has some responsibilities to the broker/agent). This post is already long enough so I'm not going to get into the minutiae of the differences of the specific duties at each level.
The highest level of representation which includes fiduciary duties is "Single Agent" and this relationship MUST be clearly stated in listing and in any buyer-broker agreements.
The next level is "Transaction Agent" which is the statutory default in Florida IF the listing agreement or buyer-broker agreement does NOT indicate otherwise.
The lowest level of representation with the fewest duties (although there are still some) to the consumer is "No Broker Relationship" but that also must be clearly stated in agreements.
As has been correctly mentioned in this thread and several others there is no Dual Agency in Florida which means a broker CANNOT be a "Single Agent" for both a seller and a buyer in the same transaction - it is deemed too much of a conflict and theoretically impossible for a broker to provide the highest level of representation and fiduciary duties to both parties; therefore it is not allowed in Florida (it is allowed in some states). However, if the parties - seller and buyer - agree that they are fine with one agent handling both sides and facilitating the transaction with no fiduciary duties to either side (but still strong representational duties), that can be done in Florida as a "Transaction Broker/Agent".
Now, what has also been stated in many of these related threads is that one must consent in writing for a broker to be a "Transaction Broker/Agent" - that is not true. As mentioned above, "Transaction Broker/Agent is the default in Florida IF none of the three relationships is specifically stated in the agreements - that fact is in the statutes. With that said consent to "transition" to a "Transaction Broker" IS required IF the original relationship entered into was as a "Single Agent", and it is later desired to allow that broker/agent to facilitate both sides of the transaction (for any number of reasons that may be beneficial). There is even a Florida approved "Single Agent" listing agreement that incorporates this "consent to transition to a Transaction Broker/Agent" right into it IF the seller knows at time of listing that they would be okay with this if the situation arises. Or, they can always decide later in a separate written consent form.
Whew! Sorry about all that. And I'm sure I'll think of things I left out, but I hope it provides some clarification in what is happening. I've tried to stick to the facts, and leave my many opinions out of it, but I'll be happy to share those later if anyone cares.
By the way I've used the term broker and agent somewhat interchangeably, but understand that ALL these agreements are legally between the consumer and the Broker although the agent generally, but not always, has authority to enter into them on the Broker's behalf.
Finally, for background, I was a licensed attorney specializing in real estate in Kentucky and Indiana where I ran/co-owned a large title company, but I gave those licenses up long ago to live and travel in our RV for 15 years before we came to The Villages in late 2019. During the pandemic, I got my Florida real estate license, and I dabble part-time as an MLS agent here in The Villages, although maybe not for much longer. The market will eventually figure out all these new rules and their effects but, in the short term, all this takes a lot of the fun out of helping buyers look for homes.
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