At the start of 2024, CEO Leo Pareja did not think eXp Realty would find itself in the real estate forms business, but eight months into this year, things look a little different.
In March 2024, the National Association of Realtors (NAR) settled the nationwide commission lawsuits and agreed to several business practice changes, including a mandate that buyers sign a broker representation agreement prior to going on a home tour with their agent. And as the clock continues to count down to the Aug. 17 implementation deadline for these changes, brokerages like eXp are finding themselves sorting out their forms.
As the largest brokerage in the country by transaction sides in 2023, Pareja said it made sense for eXp to create its own forms.
“We are now basically 17 days out from the implementation deadline and there are still a whole host of states who have not even released their forms, and there is a whole host of forms that have been released that are still very confusing, per the Consumer Federation of America (CFA) and agent commentary,” Pareja said last week.
“I did not wake up this year thinking we were going to be in the forms business, but when we realized we weren’t that far out and we had nothing, we knew we did not want to be in a situation post-Aug. 17 where we are creating liability for ourselves and our agents. So, if nobody else was going to do it, we were going to have to do something to protect our agents in the field.”
In response, eXp has created six forms. These include an ”Exclusive Authorization and Right to Sell” agreement; an “Amendment to Real Estate Listing Agreement”; a “Direct Compensation from Seller” form; a “Single Property Buyer Broker Agreement”; a “Buyer Broker Representation Agreement”; and a “Disclosure and Acknowledgement of NON-Representation” form.
In addition to the liability reasons that Pareja outlined, logistical issues also prompted the firm to create its own forms, said Holly Mabery, eXp’s senior vice president of operations.
“We chose to write our own forms because, one, we are a national company and state forms are typically copyrighted. And unless you are a member of that association, you can’t use those forms, so it would be inappropriate to take it across state lines,” Mabery said.
Side, another firm with a national footprint, has also chosen to create its own buyer representation agreement.
“I think we were among the first movers on this and we built new buy-side agreements into the Side brokerage application almost immediately upon understanding the announcement, the implications of it and how it should be productized,” said Steve Capezza, the president of Side, said.
“So, all the agents on the Side platform have had access to buyer agreements for months now with the objective being that when Aug. 17 hits, our partners and their agents will be in full stride in terms of how to handle customers and set appropriate expectations with them. We’ve taken our signals very much from the state associations. So, for example, in California, the form we baked is very much a reflection of the California Association of Realtors’ guidance.”
Like eXp and Side, @properties Christie’s International Real Estate also decided to strike out on their own with forms. All 16 of the firm’s managing brokers, along with legal counsel, worked together to create the forms, with the goal to ensure that “the voice of the agent was represented” in the discussions.
“We did feel strongly that we needed to create our own forms. Association forms tend to be all things to all people, so they often include a lot of extra language,” Thomas Downing, the company’s vice president of brokerage services, wrote in an email. “We wanted to create more streamlined forms that would consider all the legal requirements of the NAR rulings, but also feature language that our agents are comfortable with and that our clients find easy to understand.”
While some brokerages have chosen to forge their own paths, others are sticking with the forms being provided by their state Realtor associations or local MLSs.
In Iowa, buyer representation agreements have been mandatory since July 1, so Peter Voss and the agents at his firm, 3% Listing Co., made the decision to use the forms created by the state’s trade group.
“The Iowa state association has been very outspoken in saying that they were going to start sending out forms and then wanting a lot of feedback from their agents to find out what they like and what they don’t like, so they can revise them and come up with forms agents are comfortable with,” Voss said. “The good thing, though, is that they have left it wide open, meaning that the law requires forms with certain disclosures and agreements, but we can make our own if we want.”
Similarly, Ryan O’Neill, the leader of the RE/MAX Advantage Plus-brokered The Minnesota Real Estate Team, is also currently planning to use forms promulgated by his state association. But unlike Voss, he and his agents didn’t have even a draft of their new forms until last week.
As of today, O’Neill said the Minnesota state association forms still include an option to use cooperative compensation between the listing broker and buyer broker, but it isn’t the consumer’s only option.
“Cooperative compensation is still on the form, so the listing broker can still share their commission on that form, but the seller can also indicate on the form that they wish to pay the buy-side directly or not at all,” O’Neill said of the state’s listing agreement. “So, sellers have a variety of options if they want to pay the buy-side commission.”
Donny Samson of Virginia-based Samson Properties also noted that his firm will be utilizing the forms created by associations in the states where it operates.
“I feel comfortable that using what they provide will work. We allow agents to modify forms or language if they feel it’s better for their business,” Samson said. “All of our associations spend a lot of time and expertise in trying to follow the rules and provide us with appropriate forms. We feel it will help us in the marketplace as we are reading from the same piece of music that everyone else is.“
But for some firms, strict use of state forms or self-created forms is not the right option, so they are attempting to strike a middle ground.
At The Real Brokerage, which operates nationwide, President Sharran Srivatsaa said the firm does not want to get into the forms business at the moment, but it will if agents and brokers find it necessary.
“Our philosophical approach on this is that we are hopeful that the states and local bodies are going to create the right tools for the agents to implement in their marketplaces,“ Srivatsaa said. “We also think the iteration that comes out now is not going to be the one they ultimately keep.
“A few weeks ago, Indiana put out forms, we trained our agents on them and then they withdrew those forums, so we are going to have to do that training again.”
Despite Real’s reluctance, the firm is launching forms in six states on Aug. 14. This involves its three largest markets — Texas, California and Florida — and three markets that don’t currently have forms: Ohio, Kentucky and Louisiana.
“If states don’t jump in and create forms, or the forms they create are causing issues for consumers, we are going to have to jump in and create the forms,” Srivatsaa said.
On a much smaller scale than Real, ERA American Real Estate — a 15-agent operation based in Montana — is considering similar moves. Associate broker Brian Huskey said he is currently frustrated by the lack of information and guidance coming from the Montana Association of Realtors.
“We got a draft copy of our forms from the Montana association last week, but it doesn’t sound like they will drop the actual forms until the 15th or something close to the date, and at that point we are going to have to play catch-up because we’ll get a form and then have to use it the next day,” Huskey said.
Huskey’s firm and agents are also licensed in neighboring North Dakota, which sent out forms early, he said.
“Depending on what we see from Montana and how the North Dakota forms perform, we might create an internal company forum based on those two, because North Dakota did a fantastic job laying out the agreement very plainly so both the agent and the consumer can fully understand what they are agreeing to,” Huskey said. ”Creating an internal form takes time and we need to know what we are going to be allowed to do, so we don’t want to get ourselves into trouble with a form we create.”
Real estate brokerage and proptech firm Flyhomes is also taking a trepidatious step into the forms arena. While the firm is utilizing the forms provided by the state associations and MLSs where it operates, it has created its own addendum to these forms.
“There have been a lot of internal debates about this, and they are still ongoing, so it is not quite completely settled, but we are pretty certain we have a near-term path for our own agents,” said Adam Hopson, the chief strategy officer at Flyhomes.
According to Hopson, this plan includes utilizing the forms provided by local MLSs and Realtor associations, while including an addendum that Flyhomes crafted with a team of legal experts.
The addendum focuses on five points, including that the Flyhomes agent the buyer is signing the form with will be representing them; that the addendum plus the other form makes up the full agreement; what the agent’s compensation will be; and the fact they can receive compensation from the buyer, seller, builder, listing brokerage or some combination of these sources.
Additionally, the addendum notes that unlimited home tours are part of the agent’s services and that the agreement can be terminated at any time by either party. The company noted that the contents of the addendum supersede anything that might be conflicting in any of the state or MLS forms.
“As far as compliance, that is really what drove the decision to adopt the MLS forms rather than trying to come up with something that would work across all jurisdictions,” Hopson said. “We thought the local forms plus the addendum was the simplest and most straightforward approach, and it also helps increase transparency with clients.”
As brokerages and Realtor associations have prepared for the business practice changes, forms have been a hot point of contention. For example, the California Association of Realtors’ buyer representation and listing agreements were called out by the CFA for being “unreadable,” resulting in a formal inquiry from the Department of Justice.
The bottom line, however, is no matter whether they are ready or not, brokerages and associations will find out in just over a week if their forms are going to cut it.
