Forms Updates

Removal of forms 2.24 Seller Payment to Buyer’s Broker and 9.10 Buyer Broker Compensation Agreement from the library. Addition of forms 9.3A Settlement Amendment to Listing Agreement and 9.4A Buyer Representation Agreement Amendment.

• Section 4 contains the basic financial terms of the contract.  In January, we updated Section 4 to allow the parties to indicate whether seller would be contributing toward buyer brokerage fees and created Form 2.24 for the parties to lay out the details of said contribution. We have further simplified the process in our latest updates. Section 4 has been expanded to allow the parties to state:

  (1) whether Seller is paying Buyer Brokerage fees as a negotiated term of the Buyer offer, and how much expressed either as a percentage or a dollar amount;

   

  (2) whether the Listing Agent has a separate agreement with the Buyer Brokerage addressing brokerage-to-brokerage shared compensation, and for how much expressed as either a % or dollar amount.  This segment is noted as informational only and is not a contractual term.  Any brokerage-to-brokerage compensation would need to be separately agreed to in writing.  Oregon REALTORS® updated listing agreement does not facilitate brokerage-to-brokerage compensation and under the NAR Settlement Agreement such compensation may not be communicated on the MLS.  However, if such an arrangements exists off the MLS, the Buyer and Seller need to be aware of it and it needs to be accounted for, which is why it is included for informational purposes;

   

  (3) the total amount paid by Seller and the Listing firm toward Buyer Brokerage Fees, to ensure that total contributions toward Buyer Brokerage Fees do not exceed the fee set in the Buyer Representation Agreement, per the terms of the NAR Settlement Agreement

   

  (4) other Buyer closing costs or prepaid items to be paid by Seller, expressed as either a % amount or dollar amount

   

• These changes essentially integrate a variation of Form 2.24 into the Sale Agreement, allowing us to take Form 2.24 out of the library.

Added new checkbox indicating whether Buyer’s property currently has an accepted offer, input field for closing date, and additional checkboxes indication of whether the accepted offer is subject to a contingent right to sell; other minor changes for clarity.

Modified to include coverage of damage to landscaping, and also clarified that an occupant’s responsibility to repair/replace failed or damaged landscaping, systems and components only applies to landscaping, systems and components owned by the property owner.

Added language explicitly stating that Seller shall transfer all security deposits, prepaid accounts, and last-month rents to Buyer at or before Closing.

Updated to reference “Client Trust Account Holder” in addition to “Escrow,” for instances when Earnest Money is held in a Client Trust Account.

This document has been removed because seller contributions toward buyer brokerage fees are now addressed within the sale agreement itself (Section 4).

State associations, MLSs and other forms providers across the U.S and here in Oregon are revamping forms in response to the NAR settlement.  This includes Oregon REALTORS®.  We convened a Task Force of Principal Brokers and Brokers from around Oregon to assist us in reviewing our forms and making changes.  We started with the Oregon REALTORS® Listing Agreement and we wanted to give you a preview of the changes we are working on.  Below are a few key highlights of proposed edits to our Listing Agreement, along with a link to the draft.   Note that your MLS is likely making changes to its own listing agreement, and the changes may look different from ours.  Here are the highlights:

Removal of Cooperative Compensation

Under the revised Oregon REALTORS® Listing Agreement, there is no provision for the seller and listing agent to agree that a portion of the listing fee will be shared with the Buyer’s agent’s brokerage.  The listing fee will be the amount paid to the listing brokerage for its services without any inclusion for buyer brokerage compensation. Any amount that seller contributes to help a buyer pay for buyer brokerage services will need to be negotiated in the sale agreement between buyer and seller.  While cooperative compensation has always been optional and negotiable in the Listing Agreement, under the revised Agreement the fields are removed entirely.

No Upfront Seller Offers to Pay Buyer Brokerage Fees

Some forms providers are updating listing agreements to remove traditional cooperative compensation (where a listing brokerage and seller agree that a portion of listing fee will be shared with buyer’s agent’s brokerage) while providing an option for the seller to include an amount or percentage that seller is willing to contribute directly (not through the listing agent) to help the buyer pay buyer brokerage fees.  Oregon REALTORS® is taking a different approach.  Our Task Force discussed the matter at length and determined that any amounts paid by seller to help a buyer pay for buyer brokerage services should be negotiated, in the first instance, in the Sale Agreement.  The reasons are multifold including:

Under the NAR settlement agreement, the buyer’s agent cannot accept more compensation that was agreed to in the Buyer Representation Agreement.  Because at the time of signing the listing agreement the seller and listing agent do not know how much any particular buyer’s agent is owed for their services in a Buyer Representation Agreement, we concluded that it was better to leave discussions about any particular amount of seller contributions toward buyer brokerage fees to the Sale Agreement, as is currently the case with other contributions towards buyer’s closing costs.

Seller “offers” aren’t really “offers.”  They are advertisements.   On the first day of contracts class in law school, law students learn about the difference between “offers” and advertisements, or what lawyers like to call “invitations to make offers.”   If a seller says in a listing agreement that they are willing to contribute $X to help the buyer pay buyer brokerage fees, that isn’t a firm offer.  Really what they are doing is inviting buyers to submit offers that include $X as a concession from the seller.   It’s not as if the buyer or the buyer’s agent—neither of whom are party to the listing agreement—can “accept” an offer from a seller included in a listing agreement (previously, it was possible for buyer’s agent’s brokerage to accept cooperative offers from listing brokerages because the agents and brokerages had agreed to MLS rules providing such a mechanism).  Rather, the ultimate amount that a seller will be obligated to contribute to buyer brokerage fees is the amount, if any, that the seller agrees to in the sale agreement with the buyer.   In most cases, buyers are the ones submitting offers in which case the power of acceptance is with the seller, not the buyer.   It’s like offering a fridge or other personal property with the listing.  If it isn’t in the sale agreement, it isn’t binding (while it may be possible to design a listing agreement that creates a binding offer of compensation from the seller to the buyer’s agent’s brokerage, it is a legal stretch, and our presumption is that these offers are not binding)

KISS (Keep It Simple, Stupid).  As we have traveled the state discussing the NAR settlement with members and listening to their feedback about how we can help them navigate the changing environment, we have heard a strong desire from members to keep things simple to avoid agent and client confusion.  Encouraging all negotiations around seller contributions to buyer brokerage fees to happen in the sale agreement between buyer and seller was the simplest and clearest path we could take.

Seller’s Willingness to Consider Offers that Include Seller Payment of Buyer Brokerage Fees

Rather than providing fields for sellers to communicate an amount or percentage that they are willing to contribute to buyer brokerage fees, our updated listing agreement includes a section explaining to sellers that buyers and their agents are now required to enter into buyer representation agreements that set the fee for the buyer brokerage services, and that some buyers may request in the sale agreement offer that seller contribute toward buyer brokerage fees, and that some buyers and buyer’s agents may inquire in advance about seller’s willingness to do so.

Sellers can check a box instructing their agent to communicate to buyers and buyer’s brokers that the seller is willing to consider offers that include requests for seller contributions toward buyer brokerage fees, without specifying a particular amount.  Sellers can then evaluate all offers, including those that request seller payment of buyer brokerage fees, based on their overall price and terms.

Additional Listing Fee Options

The updated listing agreement allows for variations in the listing fee based on the details of the transaction that materialize.  For example, the listing agent and seller can set a different listing fee if the buyer is unrepresented, to account for the variation in the listing agent’s workload.

Limitation of 24 Months

HB 4058, which was brought forward by Oregon REALTORS® and passed the Oregon legislature in February, prohibits real estate licensees in Oregon from entering into listing agreements lasting longer than 24 months.  We have updated the Oregon REALTORS® listing agreement to limit the term to a maximum of 24 months.

Fair Housing

This change was not a result of the settlement, but based on feedback received from members.  Oregon REALTORS® Listing Agreement always included a provision requiring the seller to abide by all laws including fair housing laws.  We’ve now pulled out Fair Housing into its own section and provided more detail regarding Seller’s obligations under federal, state and local fair housing laws.

It’s important to note that other listing agreement providers, including your local MLS, may choose a different approach with their listing agreement.  There is not one right or wrong way to address the issues discussed above, and you may find that each MLS takes a different approach.  Our hope is that by explaining the logic behind our choices, you will understand why we made them.

Big changes will be happening in many MLSs across the state within the next few months.  In many instances, this will look like the MLS removing any ability to market or advertise cooperative compensation and the MLS no longer having rules of enforcement that support cooperative compensation.  Nonetheless, there will be a generation of transactions that were started before the Settlement rule changes went into effect.  Form 9.3A allows the Seller and Listing Agent to modify their listing agreement into compliance with the Settlement terms [all provisions are drawn from Section 58 of the Settlement itself, to ensure near verbatim compliance].  The agreement notes that references to compensation will be removed, that compensation to buyer representatives will no longer be done through the MLS, that conspicuous disclosure is mandatory before any payment or agreement to pay another broker, and that the broker is still permitted to offer compensation to buyer brokers, but must do so off the MLS through a separate agreement between the Listing Agent’s Firm and the Buyer Agent’s Firm.

The Buyer Representation Agreement has undergone several changes. While we’ve always had a clear and user-friendly Buyer Representation Agreement, we’ve made edits to further improve clarity and readability and to ensure compliance with both Oregon HB 4058 and the NAR Settlement Agreement.

Some changes include:

• The duties of Agent and Buyer have been formatted in a more readable manner.
• Reading the Oregon REALTORS® Buyer Advisory is now a duty of buyer, rather than an acknowledgement of past conduct (reading the Oregon Real Estate Agency Disclosure Pamphlet remains an acknowledgement of past conduct).
• The term of the Agreement cannot be more than 24 months [per 2024’s HB 4058].
• More options are provided for method of compensation—in addition to a commission or flat fee due at Closing, the parties have a checkbox and ample space to describe other arrangements (hourly, etc.).
• The contract emphasizes what has always been the case—that Buyer Brokerage Fees are fully negotiable and not set by law or any third party
• The section referring to seller contributions towards Buyer Brokerage Fees has been rewritten to maximize clarity and to further emphasize that such contributions are neither required nor recommended by law or any third party.
• The Agreement makes clear that in the event seller contributes toward Buyer Brokerage Fees, the Buyer’s Brokerage cannot accept compensation in excess of what was agreed to by the Buyer and Agent in the Buyer Representation Agreement

This is the document the Buyers and Agents can use to modify the terms of a Buyer Representation Agreement.

Updated language referencing agent compensation; other minor updates

Form 9.10 was designed to memorialize cooperative compensation agreements between brokerages.  Because we have removed cooperative compensation from our listing agreement, we have also removed this form from the library.

Updated language referencing agent compensation.  Also updated all the links to ensure that they are active links. Also, while we are unable to assure that the links remain active within the vendor’s platforms, we did reformat all the links so that the website could be more easily found with a simple google search. So, instead of saying “click here to learn more” we now say something along the lines of “visit the Oregon.gov ‘DEQ Wood Stove’ webpage to learn more”. If you Google “Oregon.gov deq wood stove” the first result to show is the webpage we are referring to.  Other minor updates.