Forms Update - September 2024

September 4, 2024

The ability to obtain accurate, timely forms is a paramount part of our members’ business. Iowa REALTORS® is dedicated to providing this access as a member benefit.

In recent months, Iowa REALTORS® has responded to changing real estate practices by updating and creating forms that can be utilized by our members now and in the future.

Most recently, Iowa REALTORS® has made additional updates to several key forms in the IAR forms library to ensure compliance with new laws and proposed settlement stipulations. A summary of the most recent IAR forms changes can be found below.

EXCLUSIVE LISTING AGREEMENT

In the IAR Exclusive Listing Agreement, Section 6, Buyer Brokerage Representation Fee, was updated to the following:

“Owner/Seller agrees to pay Buyer’s Brokerage up to $_______or _______% of gross sale price. The buyer brokerage representation fee is paid in addition to the listing brokerage service fee. Seller agrees to give the listing Broker permission to advertise and/or communicate to Buyer or Buyer’s brokerage that Buyer’s brokerage compensation will be considered with an offer.

There shall be no mention of compensation on any Multiple Listing Service (MLS), nor shall compensation be included in any document uploaded to the MLS or an MLS adjacent service.”

This section was updated to provide clarity in how compensation is paid by the inclusion of “paid in addition to” verbiage, so the client is aware that the buyer broker fee is paid in addition to the listing broker fee in Section 5 of the form. It also contains disclosure reminding agents and consumers that compensation is no longer able to be posted anywhere in the MLS, but can still be communicated off the MLS.

As a reminder, the number or amount placed in Section 5 is the listing broker fee only and is not to be combined with any compensation that may be offered for the buyer broker fee. The amount, if any, that the seller/owner is willing to pay for the buyer broker’s compensation is to be placed in Section 6.

The following was also added as a separate section to the Exclusive Listing Agreement:

“CLOSING REPRESENTATIVE: A closing representative may be appointed to provide settlement services, closing services and title services. Parties in a transaction are not required to use the same service provider. They may choose their own settlement, closing and title services provider and be charged for the services they provide.”

Finally, the Forms Committee chose to remove the unrepresented buyer section in the exclusive listing agreement because it led to both consumer and agent confusion over what amount of compensation to place in that section. If a brokerage chooses to employ different compensation for a transaction with an unrepresented buyer, that could be done with an addendum to the listing agreement.

BUYER AGREEMENT

In the Buyer Agreement Section 11a, Brokers Compensation, was updated to match the format of the listing agreement to the following:
“Broker’s Professional Service Fee (“Fee’) shall be $_______or ______% of gross sale price.”

Closing Representative Language was also revised to match with what is outlined in the IAR Exclusive Listing Agreement.

The following section was also added to the Buyer Agreement:
“Buyer hereby gives permission for Buyer’s Broker or agent to disclose to and share the Buyer Agreement and its terms with any third party involved in a transaction including, but not limited to, lenders, title companies, and closing representatives.”

This section provides the opportunity for the agent to receive permission from their client to share the Buyer Agreement with third parties. As many lenders and closing companies will likely request a copy of the form as a part of the transaction, it is essential clients are aware and give permission for the Buyer Agreement to be shared.

BUYER BROKERAGE COMPENSATION ADDENDUM

The Buyer Brokerage Compensation Addendum was revised to include more clear language and necessary disclosures.

The first option in the Addendum now reads as follows:
“Seller agrees to pay the Buyer’s brokerage, who has a signed Buyer Agreement with the Buyer of the property, the compensation of $_______ or ______% of sales price at settlement.”

The following disclosures were also added to comply with the proposed settlement:

“Seller’s agreement to allow Buyer’s Broker to be compensated at time of settlement does not create any type of exclusive duty, agency agreement or any other type of relationship between Seller and Buyer’s brokerage or agent.

This is a binding agreement between the parties. Compensation is negotiable between the parties of a transaction and is not set by law.

The Buyer’s Broker or agent shall not receive compensation for brokerage services from any source of any kind that exceeds the amount specifically agreed to in the Buyer Agreement.”

PURCHASE AGREEMENT

As of August 14, 2024, changes to Iowa Real Estate Administrative Rules now allow compensation to be placed in a purchase agreement if desired. IAR revised the Purchase Agreement to include a compensation section based on the updated administrative rules.

The following was added to the Purchase Agreement:
“Checkbox 1: Seller agrees to pay the Buyer’s brokerage, who has a signed Buyer agreement with the Buyer of the property, the compensation of $__________________ or _____________% at settlement.

Checkbox 2: Seller is not being asked to provide compensation to the Buyer’s brokerage.

Seller’s agreement to allow Buyer’s Broker to be compensated at time of settlement does not create any type of exclusive duty, agency agreement or any other type of relationship between Seller and Buyer’s brokerage or agent.

Compensation is negotiable between the parties of a transaction and is not set by law.”

With the addition of this language to the Purchase Agreement, consumers now have the option to directly negotiate compensation as part of the purchase contract. Closing representative language was also included in the update to the Purchase Agreement to align with the other IAR forms.