Why Listing Agents Cannot Require the Buyer Agency Agreement Be Included in the Buyer’s Offer
Navigate Buyer Agency Agreement rules with confidence—know what’s required, avoid legal pitfalls, and push back against demands that cross the line.
Related reading: Presenting the Buyer Agency Agreement with Rock-Star Confidence
Can the listing broker/listing agent require the selling broker/selling agent to submit the buyer representation agreement with their offer?
The rules about whether a listing agent can require a buyer’s agent to submit a buyer representation agreement with an offer can vary by state, but several general principles apply across the United States. The simple answer is no, the listing agent cannot make that demand for the following reasons:
- Fair Housing Laws and Ethical Standards: Requiring the buyer representation agreement could be seen as a potential violation of fair housing laws and ethical standards, particularly if it creates an unnecessary barrier to the submission of offers or could be perceived as discriminatory.
- Fiduciary Duty to the Seller: The listing agent has a fiduciary duty to act in the best interests of the seller. This includes presenting ALL offers unless there is a lawful reason not to. Imposing additional requirements, such as demanding a buyer representation agreement, could be seen as an unnecessary barrier that might prevent the seller from considering all potential offers, which may not align with the seller’s best interests.
- NAR Code of Ethics: According to the NAR Code of Ethics, listing agents must present all offers to the seller as soon as possible. This requirement generally applies regardless of whether the buyer’s agent submits a buyer representation agreement. Refusing to submit an offer without this agreement could be considered a violation of these ethical obligations.
- License Law: Each state has specific laws that govern agents’ licenses, so call your department of licensing to find out what they say on this topic. In general, license law does require agents to act in the best interests of their clients. Imposing additional requirements that are not necessary for evaluating the offer could be seen as a breach of the agent’s fiduciary duty to the seller, as it may prevent the seller from considering all potential offers.
Considerations
While demanding the Buyer Agency Agreement be included might seem like a good idea, as a listing agent, there are other things to keep in mind:
Seller’s Instruction: Seller’s Direction: If the listing agent claims they are acting on the seller’s instructions to request a buyer representation agreement, the situation becomes more complex. While the seller has the right to dictate certain terms, the listing agent must ensure that these instructions do not violate fair housing laws, state real estate laws, or ethical standards. The agent must still act within the bounds of legality and ethics, even when following the seller’s directives.
State-Specific Regulations: State Laws Vary: Different states have varying regulations and interpretations of what is permissible in real estate transactions. For instance, some states may have stricter interpretations of what constitutes discrimination or an unfair practice in real estate. It’s important to consult local real estate laws or a legal professional in your state to understand the specific rules.
Related reading: Real Estate Fiduciary Duty: Using the OLD CAR Acronym To Keep It In Mind
Next Steps:
We know that you might not want to rock the boat when it comes to dealing with other agents, but when your duty to look out for your buyers’ best interests is under threat, there are steps you can take to make sure that the other agent is doing what they should, especially when it comes to what’s right for their sellers.
- Contact the Listing Agent: Politely but firmly remind the listing agent of their obligation to present all offers to the seller promptly, regardless of whether a buyer representation agreement is included.
- File a Complaint: If the listing agent continues to refuse to submit your offer, you may want to file a complaint with the local real estate board or the Department of State’s Division of Licensing Services, which oversees real estate licensing and compliance.
This approach ensures that your rights and the interests of your client (the buyer) are protected, and it encourages compliance with the laws and ethical standards governing real estate transactions.
Related reading: Ramsey Solutions – What Is a Buyer’s Agent Agreement?
Related reading: Jennifer Jewell – What is a Realtors Fiduciary Duty?
The Takeaway
The listing agent’s demand to see the buyer representation agreement before submitting your offer is likely unlawful and unethical. You can challenge this requirement by reminding the listing agent of their duty to present ALL offers to the seller and by citing relevant ethical guidelines from the NAR Code of Ethics. If necessary, you may also consider filing a complaint with the local real estate board or seeking legal advice.
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