Establish Best Practices for Buyer Services

The newly required practice changes may lead to some buyers deciding to work directly with listing agents, in the form of dual agency, or as a buyer customer (vs. client) of the brokerage.

Dual agency in real estate has a long history, dating back to the early development of modern real estate practices in the U.S. However, it became more formalized in the 1980s as the real estate industry evolved with real estate agents primarily representing sellers. Under this arrangement sub-agents, including cooperating agents, represented the seller, even when working with buyers. This form of representation created conflicts of interest, as buyers were often unaware that the agent assisting them was legally obligated to represent the seller’s interests.

As buyer agency gained favor in the late 1980s and early 1990s—driven by the rise of buyer agency agreements and the efforts of organizations like the Real Estate Buyer’s Agency Council (REBAC)—disclosure requirements for dual and designated agency were introduced in many states. Approximately 18 states require such disclosures, including cooperative compensation; many of these structures have existed for years, predating recent lawsuits.

The settlement encourages competition for agent services, and brokerages must avoid unintentionally undermining these efforts by continuing outdated practices, such as dual agency, and working to preserve the valuable benefit of buyer representation for the consumer. It is essential to avoid using pre-settlement forms, contracts, or association agreements that perpetuate legacy models or procedures, as well as implementing quick workarounds. Such actions could trigger future lawsuits.

Brokerages should embrace the new system by establishing best practices for handling unrepresented buyers, and for buyer representation, as this is the clearest way to provide transparency and clarity of the agent’s role for both sellers and buyers. Helping the consumer understand their rights—and the broker and agent obligations—in the transaction, can elevate the value of the services and the professionalism of the real estate agent.

Many states treat listing brokers working with buyers directly as “facilitators” or the like. States handle it a wide variety of ways, one of the reasons the settlement is hard to implement across the whole country. That default relationship normally would not require an agreement to create it. In other states, the listing broker has the option to be the seller’s facilitator and not agent.

The point is that the opportunities for a broker vary quite a lot depending on which state(s) the broker operates in. For some greater use of facilitator roles may be useful. Others may wish to lobby legislatures to permit designated agency (if it’s not already permitted). And given that buyers are on the hook for buyer broker compensation now, experienced buyers may just say they don’t want to receive services from a broker. Any collective action aimed at requiring buyers to use (and pay for) a broker would meet antitrust scrutiny.