A new nationwide regulation will require buyers to sign a written agreement with a real estate agent before touring any homes. This change aims to enhance transparency and ensure fair compensation for agents while providing clarity for buyers from the very beginning of their home search journey.
What is the Pre-Agency Form?
The Pre-Agency Form is a preliminary agreement between the buyer and the real estate agent. This form is designed to establish a temporary, non-binding relationship that allows the buyer to tour homes with the agent. The Pre-Agency Agreement can be used while a buyer decides if they will be represented as a client under Buyer Agency, or as a customer. It also includes a critical component: a line where the compensation for the agent showing the home is specified and agreed upon.
Key Components of the Pre-Agency Form
- Buyer and Agent Information: The form includes fields for the buyer’s and the agent’s names and contact details, ensuring both parties are clearly identified.
- Compensation Terms: This section specifies the amount or percentage of compensation the agent will receive for their services. The compensation can be a flat fee, a percentage of the home’s sale price, or another agreed-upon amount.
- Services Provided: The form outlines the specific services the agent will provide during the pre-agency period, such as property showings, initial consultations, and answering questions about the market.
- Signatures and Date: Both the buyer and the agent must sign and date the form, indicating their agreement to the terms.
- Not an Agency Agreement: It is important to keep in mind that this is not an agency agreement and it does NOT authorize an agent to draft an Offer to Purchase.
Why is the Pre-Agency Form Important?
The introduction of the Pre-Agency Form serves several essential purposes:
- Transparency and Clarity: It ensures that both the buyer and the agent have a clear understanding of the compensation terms and the nature of their relationship before any home tours take place. This helps prevent misunderstandings and potential disputes.
- Fair Compensation: By specifying the compensation upfront, the form guarantees that real estate agents are fairly compensated for their time and expertise, even if the buyer ultimately decides not to purchase a home.
- Legal Compliance: The form aligns with the new nationwide legal requirements, ensuring that all parties involved are operating within the bounds of the law.
How Does the Pre-Agency Form Benefit Buyers?
For buyers, the Pre-Agency Form offers several advantages:
- Flexibility: It allows buyers to engage with an agent without committing to a full buyer agency agreement. This can be particularly useful for those who are still in the early stages of their home search and want to explore their options.
- Informed Decision Making: By having a clear understanding of the agent’s compensation and duties, buyers can make more informed decisions about which agents to work with and what to expect financially.
- Legal Protection: The form provides a level of legal protection, ensuring that the terms of the agent’s compensation are documented and agreed upon by both parties.
What Buyers Need to Do
If you’re planning to tour homes starting on or after August 17, 2024, here’s what you need to do:
- Find a Real Estate Agent: Begin by finding a real estate agent who can assist you with your home search. Research and select an agent who you feel comfortable working with.
- Review the Pre-Agency Form: Before touring any homes, review the Pre-Agency Form with your chosen agent. Ensure you understand the compensation terms and any services provided during the pre-agency period.
- Sign the Form: Once you’re satisfied with the terms, sign the form along with your agent. This will allow you to start touring homes..
Powers Realty Group and the Pre-Agency Form
At Powers Realty Group, we are fully prepared to assist buyers with the new Pre-Agency Form. Our agents are knowledgeable about the new requirements and ready to guide you through the process. We ensure that all necessary forms, including the Pre-Agency Forms are available at every initial consultation and open house events.
Conclusion
The introduction of the Pre-Agency Form marks a significant change in the home buying process. It enhances transparency, ensures fair compensation for agents, and provides buyers with the flexibility and clarity they need during their home search. If you’re planning to tour homes and do not already have a Client or Customer relationship with a real estate agent, make sure you understand and complete the Pre-Agency Form to comply with the new regulations and ensure a smooth and informed home buying experience.
For more detailed information, visit the Powers Realty Group Blog, where we provide comprehensive explanations of the new forms and other important updates in the real estate market. If you have any questions or need assistance, feel free to reach out to us at Powers Realty Group.
For more information on the Home Buying Process, click here.
