A new law signed on Friday by Alabama’s governor will no longer require buyer agreements before agents tour properties with a client.
“Great news! Governor Kay Ivey has officially signed HB 230 into law!” announced the Alabama Association of Realtors (AAR) in a social media posting. “This important legislation clarifies the timing of written buyer agreements, strengthens Alabama’s RECAD [Real Estate Consumers Agency and Disclosure Act] framework, and protects consumers from premature binding contracts.”
“With HB 230 in place, potential buyers cannot be forced to sign a binding agreement just to view a property,” the AAR added. “Instead, a written agreement is required before submitting an offer, ensuring greater transparency and consistency in real estate transactions statewide. Thank you to Governor Ivey and the Alabama Legislature for supporting this important step forward!”
The new will now require buyers to be informaed how much the agent is compensated prior to showing a property. While the new law differs from the terms of the National Association of Realtors’ (NAR) settlement of the Sitzer/Burnett case, the organization had previously noted that state law takes precedent over the settlement’s terms.
“Written buyer agreements will be required of all MLS Participants working with buyers prior to touring a home, unless state law requires a written buyer agreement earlier in time,” said NAR in a guidance issued shortly after the settlement was reached.
Well done!
Interesting perspective and legal point. I have a sincere question regarding this law. When you hire a repairman, it’s common practice to be charged for an estimate—and often, that fee is applied to the total cost if you move forward with the repair. Charging for an estimate is not illegal.
With that in mind:
1. Would an agent be allowed to charge for a showing—perhaps with the option to credit that fee toward their commission if the client decides to work with them?
2. Would agents now be required to show homes to anyone who requests a viewing, free of charge? And if they decline, could that potentially be considered a criminal offense, like a misdemeanor?
3. Could a Fair Housing violation be an additional issue if request to view home rejected by an agent?
4. Could a person force an agent to show many homes (all day, without a buyer’s agreement for free)? Basically work for free or you violate state law for not honoring a home viewing request AND If the decision to show more or less homes was based on perception of individual’s wealth would that also be a Fair Housing Violation?
Really good questions. I’m interested in hearing the answers.
This is a step forward for Alabama, but unfortunately, the NAR settlement is in fact a huge step backwards for consumers across the country. Prior to the settlement, brokers were not a party to the contract to buy and sell. Now, even though brokers are not a party to the contract, their commission is negotiated within the contract. I see this as a disadvantage to buyers. The default position of a BA is to now ask for 3%. Prior to the settlement, many brokers offered either a buyers rebate to their client, or the seller had already reduced the offered commission to 2.5%, and in many cases slightly less. The standard BA commission in many places was actually becoming 2.5%, and no it is inching back up to 3%. I see this as a major fail and anxiously await the time that all broker fees transition to flat fee. This is long overdue, and I say this as a licensed broker.
Price fixing discussion?
The NAR ruling will not support Co-op fees as part of the MLS listing. This appears to be a State of Alabama reaction to the need for a buyer’s broker to be paid by a purchaser. This Alabama law will allow a potential buyer to “shop” broker fees easier with no binding agreement and will probably drive down real estate fees for buyers.
It may also “thin down” the number of brokers willing to work the buyer’s agent side of a deal.
The Alabama law makes sense to me when I work with a buyer. Unless you have a personal relationship with the buyer, the agent/broker may need to gain their new customer’s trust and confidence before having them commit in writing to buyer agent/broker compensation. This can be more easily achieved by showing the prospective buyer a half dozen homes or so to help you gauge your prospect’s seriousness, time frame for purchasing and financial ability to purchase real estate. Its mutually beneficial, and I hope this change is implemented in Louisiana as well.