If you saw Zillow’s press release boasting of offering buyer representation agreements (BRAs), then you know they are just spinning nonsense.
What Is Zillow’s Buyer Representation Agreement?
Zillow does not provide a real Buyers Brokerage Agreement that defines the terms under which a real estate agent will assist the homebuyer in finding and purchasing property, often including an Agency and Compensation agreement.
Zillow is pushing hard for this strategy through the National Association of Realtors’ commission lawsuit settlement agreement and is entering buyer representation agreements.
NAR’s settlement agreement stipulates that agents will need a written contract with their clients before acting as buyer brokers for them. Recently, this trade group outlined that such an agreement must be in place before taking an interested buyer on a home tour.
Zillow announced on Tuesday that they will offer nonexclusive contracts to buyers and agents for home tours ahead of rule changes being implemented in July.
IDX Consulting Services of IDX International of Boston.
According to Zillow’s blog post, they are not required by NAR’s settlement agreement to offer consumer-facing agreements; however, Samuelson noted that Zillow views this as an opportunity for them to provide tools that fulfill requirements while placing consumer needs first.
Zillow agreements are nonexclusive and have an initial tour duration of seven days for any prospective buyers who come through with tours conducted by agents on Zillow. Furthermore, no compensation or exclusivity agreement exists in these contracts.
What Does That Mean? After reviewing the contract, nothing changes; neither there is an Agency Agreement nor compensation terms agreed upon; therefore NONE OF THIS APPLIES AND THIS AGREEMENT DOES NOT POSE AS A CONTRACT, simply an arrangement to show houses for one week only. So in other words Zillow is misleading the people they are selling their leads to.
What Is the Difference? Purpose and Scope:
A Touring Agreement primarily addresses activities associated with consulting the buyer on specific properties and touring them. It does not encompass other services offered under buyer brokerage agreements such as negotiating purchase terms, managing offers and counteroffers, guiding through closing, or providing home buying guidance – effectively it only addresses early stages of the home purchasing process.
Agency Relationship:
Unlike a buyer’s brokerage agreement that establishes an agency relationship where an agent owes fiduciary duties to the buyer, Touring Agreement explicitly states there is no agency relationship formed; meaning the broker does not represent them in an advocate capacity as previously. This may reduce their obligation to advocate on their behalf for maximum efficiency.
Duration:
Touring Agreements typically run for no more than seven days, which makes them shorter than buyer’s brokerage agreements which often last several months or until a transaction closes.
Fees:
In contrast with buyer brokerage agreements, where agents’ compensation can often include commission-based arrangements based on purchase price of property, the Touring Agreement states no buyer fees will be payable for touring services. Furthermore, should more extensive brokerage services beyond touring be required then an individual agreement should be created for that.
Additional Services:
Should services beyond touring be necessary, these would need to be addressed separately through contract. This differs from a buyer’s brokerage agreement where various aspects of the purchasing process may be covered under one agreement.
Legal and Ethical Standards:
Both forms of agreements stipulate adherence to applicable laws and ethical standards, such as nondiscrimination policies. However, due to its lack of an agency relationship in Touring Agreements, their duties to buyers may differ significantly such as confidentiality and full disclosure.
Touring Agreements provide more limited and specific contracts compared to buyers’ brokerage agreements, focusing solely on property touring without creating full agency relationships or engaging in comprehensive transaction management.