New Agency Disclosure Takeaways for Builders

As many builders are aware, the Commonwealth of Virginia has new regulations for disclosing broker and buyer representation.  The law went into effect July 1, 2012. HBAR and the Richmond Association of Realtors (RAR) hosted an educational seminar last month to explain the new rules and the implications for builders and Realtors. An important distinction is that builder employees who are not real estate licensees are not required  to complete a buyer broker agreement for potential buyers, but it is always wise to ask if buyer has signed a buyer agency agreement since the buyer is bound by the terms of that agreement.

The full set of key takeaways from that event follows:

  • New law effective July 1, 2012
    • Applies to all real estate licensees in Commonwealth of Virginia
    • Licensees must use new agency disclosure forms with buyers
    • All brokerage relationships must be in writing

 

  • Types of Builder Representation
    • Licensee representing Builder – Standard Agency
    • Licensee – MLS Only – Limited Service or Independent Contractor
    • Builders’ Employees – non-Licensee – no requirement for paperwork but wise to ask if buyer has signed a buyer agency agreement since buyer is bound by the terms of that agreement

 

  • Buyers’ Impact
    • This is a contract between buyer and broker
    • Buyer must abide by terms of contract; seller/builder is not a party to this agreement
    • Buyer does not have to have buyer representation; any agent can perform ministerial duties for any buyer

 

  • Agent Impact
    • Must have agreement signed to show buyer’s non-listed properties
    • Site agent should always ask “are you working with an agent – do you have a buyer broker agreement”
    • Sign-in sheet or guest register should have include the question as well -
    • Back up agent cannot “change” hats and become the buyers representative

 

  • Builder Impact
    • Non-licensed builder or employee does not need buyer broker agreement signed
    • Builder/employee needs to recognize that Buyer Broker Agreement is binding upon the buyer – should always ask “are you working with an agent – do you have a buyer broker agreement”
    • Builder may consider adding contract clause
    • “Buyer ___is or _____is not represented by a licensed Realtor and warrants that they do not have an existing Buyer Broker Agreement”

By: Craig Toalson

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S.B. Cox