The real estate industry has weathered many storms, eventually emerging from the dark clouds to provide Americans with the opportunity and ability to obtain homeownership. Today, the industry finds itself, once again, in the midst of another storm.
The outcome of the Burnett/Sitzer trial may prove a catalyst for change in the industry. As we continue to navigate these shifts, the Iowa Association of REALTORS® will support you every step of the way. We will continue to provide you with valuable information, fierce legislative representation and the tools to enhance your business.
A strong, cohesive Exclusive Buyer Agreement is the first step in moving the real estate industry forward in Iowa.
What is the Burnett/Sitzer Trial?
In October 2023, a jury returned a verdict in favor of the plaintiffs in a commission-related lawsuit against the National Association of REALTORS® and several corporate defendants. The lawsuit alleged collusion with the intent to inflate commissions. Much of this trial centered around the NAR clear cooperation rule that in order to list a property in the MLS, a listing broker must make an offer of compensation to a buyer broker. The plaintiffs alleged this rule is anti-competitive, resulting in artificially inflated commissions and prices.
NAR, along with co-defendants HomeServices of America and Keller Williams Realty, maintained the validity of the clear cooperation rule and its impact in creating a competitive and fair marketplace. NAR reiterated that compensation is ALWAYS negotiable, and that clear cooperation allows buyer representation to be a reality for all, regardless of socioeconomic status. Their arguments highlighted the extensive value REALTORS® provide for their clients during a real estate transaction and beyond.
It was clear from NARs standpoint that the intent of the pro-consumer rule is to promote transparency and competition in the real estate market, ensuring the best outcomes for both buyers and sellers. Unfortunately the jury found in favor of the plaintiffs, awarding the maximum amount of financial damages.
What Now?
While the verdict in the Burnett case was unsatisfactory, the case - and issues - is far from over. NAR and its allies are tirelessly working to appeal the verdict to ensure every buyer can afford the representation they need for what is likely the largest financial transaction of their lives.
In the months since the verdict was returned, several copycat lawsuits have been filed around the country. IAR is working closely with NAR and other REALTOR® associations across the country to ensure we have a united defense, while continuing to promote fairness and transparency in real estate.
Why do Exclusive Buyer Agreements Matter?
Many states already require the use of exclusive buyer agreements in a real estate transaction. These agreements allow a REALTOR® to create a contractual relationship with their client and ensure they are compensated for their work while maintaining fair treatment for their clients.
Despite lawsuits and narratives that call into question the role of a REALTOR®, we know the dedication and commitment REALTORS® across the state of Iowa have to their buyer clients. However, communicating this value to the consumer is critical.
The best way to protect yourself and your client is to use exclusive buyer agreements in every transaction.
Through the use of these agreements, you will showcase your value to the consumer and explain the extensive work you do on their behalf. You are guiding your client through a complicated, life-altering purchase, and often they have no idea all the moving pieces you handle behind the scenes. When presenting these agreements to your client, explain the process, be clear on your compensation, and describe the value you bring to the table.
IAR is invested in protecting our members and all Iowans. Excuyer agreements will allow you to continue to grow your business and enable consumers to obtain professional representation.
What is IAR doing?
With many questions unanswered following the Burnett trial and subsequent lawsuits, we understand that our members may feel uncertain about the future of the industry and profession. Please know that the Iowa Association of REALTORS® continues to work tirelessly on behalf of our members. We are at the forefront of these issues. The real estate market in Iowa remains strong and accessible for all.
IAR is engaged in several efforts to prepare our members for the future of real estate:
Buyer Agreement Legislation
The IAR Legislative Committee and government affairs staff drafted legislation to require the use of exclusive buyer agreements in a real estate transaction. The Real Estate Transparency Act enables licensees to represent and work in the best interest of both buyer and seller clients through the clear contractual outlining of obligations and duties of parties in the transaction. This is achieved by:
- Requiring licensees to have signed exclusive buyer agreements prior to presenting an offer for the purchase of real estate on behalf of a client.
- Maintaining agency disclosure requirements to ensure the role of a licensee and their value in a transaction is clearly communicated to clients.
- Providing transparency in the allocation of compensation of brokers in a real estate transaction.
Exclusive Buyer Agreement Form
The IAR Forms Committee and our legal team developed an exclusive buyer agreement form, which will be available to all members in early 2024. This form was created with input from members of every local board across the state and has been modeled after several states who currently mandate exclusive buyer agreements. The form is available on Remine and Form Simplicity.
Training on Buyer Representation
The IAR staff and leadership team will be traveling to each local board to educate and train members on the importance and usage of exclusive buyer agreements. These meetings, which will occur from March to June, aim to ensure our membership is prepared for the future and informed on any changes.