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Tag: buyer representation

Highlights of the Updated TN Realtors Forms

Written by newmanifest on . Posted in EMTAR.

Note: This is the third of four blog posts leading to August 17, 2024, when a number of new rules and protocols will take effect as a result of the NAR lawsuits settlement. The other topics in the series are The Ins and Outs of Buyer Agreements (7/25), Updated Rules on Offers Of Compensation (8/1), and MLS Rule Changes and How They Affect EMTAR Members (8/15). Please stay tuned!

MANAGING/PRINCIPAL BROKER FOCUS
In each of these blog we are spotlighting items of particular interest to our Managing/Principal Brokers, because we know that those who lead firms and offices are on the front lines of answering agents’ questions.

1: First, brokers, please help us make sure your agents are aware of the second of two opportunities to learn about the forms changes. Led by veteran instructor Susan Barnette, this free Zoom course will delve into the specifics. Here are the details:

TN Realtors Form Changes – ZOOM
Wednesday, August 14, 2024
9:00 – 10:00 AM (1 hour CE)
Register here.

2: EMTAR will host a Brokers Forum on Wednesday, September 18, a FREE luncheon for Managing Brokers only. We want to follow up one month after the NAR Settlement implementation to see where market practices are trending AND to address any questions. We ask that you RSVP, as seats are limited. Here are the details:

Who: Managing Brokers
What: Brokers Forum – Market Practices after the NAR SettlementWhere: EMTAR Training Room (2588 N. Mt. Juliet Rd.)
When: Wednesday, Sept. 18 — 1:00 – 2:30 PMProvided: FREE Catered Lunch
RSVP: Please send an email noting “Brokers Forum – Yes” to info@emtar.com.

3: Finally, you might wish to view and/or point the agents in your firm to the 20-minute video here from the state Association going over the forms changes.

TN REALTORS FORMS CHANGES
Now let’s turn to the impact of the NAR settlement on TN Realtors forms, which are available on the state’s Forms on the Fly page (member login required).

**Some of the following information ties into NAR’s Settlement FAQs (here). It’s important to emphasize that as new practices take effect, the details may be fluid. We will communicate any updates/changes related to the settlement as we become aware of them.

As noted above, TN Realtors discussed the forms changes in a video posted here. The NAR Settlement has resulted in only “minimal updates” to the Tennessee forms library, as Legal Counsel Addison Russell and 2024 Residential Forms Committee Chair Cindy Stanton emphasized during the video.

The bottom line of the changes, they noted, is:

  • Compensation will come off of the MLS altogether as of August 17, 2024.
  • Written agreements will be required between buyers and agents prior to touring (showing) a property.
  • By law, commissions are not set and are fully negotiable—which is something Tennessee has long included in its forms, but some tweaks have been made to ensure that this is even clearer.
  • Finally, an amendment will be required for any Buyer Representation Agreement in place prior to August 17 (for which a Purchase & Sale Agreement has NOT yet been executed) to incorporate the settlement changes.

Some questions remain and information might need to be updated as the practice changes go into effect, so Tennessee is watching other states carefully and staying tuned to NAR for any developments that will affect these forms in the future.

Here are the only five forms affected by the settlement and a summary of each:

RF101 – Exclusive Right to Sell Listing Agreement

  • Small tweaks have been made to Section 6.
  • Item 5, Seller Concessions, specifies those options.
  • Item 7, Compensation, states in all caps: “Broker compensation is not set by law and compensation rates are fully negotiable.”
  • Slight changes were made to Compensation to Broker for Sale, Cooperating Compensation, and Compensation to Broker for Lease.
  • Item 8, Responsibilities and Rights of the Parties, removed the MLS requirement and replaced it with, “Broker is authorized to communicate any offer of cooperating compensation to prospective Selling Agents or Facilitators.”

These updates “shouldn’t change how you’re practicing much, but we are trying to make it more concise,” Addison Russell said.

RF141 – Exclusive Buyer Representation Agreement

  • Section 3 has been rewritten into a new section called Compensation (Section 4).
  • The new section addresses compensation for broker services and compensation from the seller.
  • It includes a “Difference” item: “In the event that the amount of any cooperating compensation paid by Seller or Seller’s broker is less than the amount listed above, Buyer agrees to pay Broker the difference at closing.”
  • A cap on compensation is included: “If Broker is an MLS participant, Broker shall not receive compensation . . . that exceeds the amount listed above.”
  • VA Buyer: This information is on a new line but remains as it has been.

“The intent as always is to make as little disruption as possible” for REALTOR® members, Cindy Stanton said.

RF143 – Written Agreement with Buyer Before Touring a Home
“This may be the form that we get the most questions about,” Addison Russell said.

  • The new form is one of the bigger changes pursuant to the NAR Settlement.
  • It requires a written agreement with a buyer before touring or showing a property.
  • Tennessee already has our Buyer Representation Agreement (RF141), and members are encouraged to continue to have a buyer sign that before touring/showing properties.
  • If you are a REALOR® member and choose not to practice agency relationship, or are entering into a non-exclusive agency relationship, this form (RF143) is the one you will use to establish facilitator status with a buyer prior to touring a home.

RF401 – Purchase and Sale Agreement

  • Very minor updates have been made to this form, the most commonly used document by all parties.
  • Item 13. Brokerage, again states that compensation is laid out in separate agreements, and is fully negotiable.
  • There isn’t a Compensation section on this form. Members should continue to use the compensation section of the listing agreement. Brokers are parties to RF101 but NOT to the Purchase and Sale Agreement, so there was no need for a separate Compensation section here.
  • A new stipulation has been added (item 24), as needed. Selling Broker (Broker assisting Buyer) Compensation: “Seller shall pay $___ or ___% of the Purchase Price of the Property to Selling Broker (Broker assisting Buyer) at Closing as a Concession to Buyer.”

RF642 – Amendment to any Buyer Representation Agreement Entered into Prior to August 17, 2024

  • Again, if you have a Buyer Representation Agreement in place but a Purchase and Sale Agreement has NOT been executed as of August 17, you will need to fill out this form with your buyer and have them sign it.

Addison Russell concluded at the end of the video, “We felt really good about where we were already, and I think that’s apparent by the minimal changes that were needed” to the TN forms.

NEED MORE QUESTIONS ANSWERED?
We encourage you to email info@emtar.com with any NAR Settlement questions you may have regarding TN Realtors® Forms, Realtracs, and changes in Real Estate Practices prior to our August 8 Membership Luncheon. The luncheon will be video-recorded with a Q&A from a moderated panel of TN Realtors® Legal Counsel, Forms Committee, and Realtracs representation.

ONCE AGAIN, THANK YOU EMTAR MEMBERS!
As we quickly move toward August 17, let us emphasize that we appreciate the difference you make in our communities. Buyers and sellers know they can count on your expertise, your strong ethical commitment, and your attention to their needs. Please watch for more information leading to and beyond the effective date.

About EMTAR: Chartered in 1969, our Association’s 1,300+ REALTORS® are a proud part of the 36,000+ members of Tennessee REALTORS® and of the 1.5 million+ members of NAR, all working to serve the public and protect the rights of America’s property owners. EMTAR members are known not only for their unmatched real estate excellence and high ethical standards, but also for being generous, hospitable, others-focused, loyal, hardworking, and eager to help wherever and whenever help is needed.