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New Changes for 2024
The biggest change comes in the form of new Brokerage Services Agreement's (BSA). There is NO STANDARD FORM that brokerages must use and the majority will likely create their own forms.
Washington State has only MINIMUM requirements that must be included in the agreement.
Buyer BSA Minimum Requirements
Term
There should be a CLEAR space to include the number of DAYS that the agreement will have. The State requires a DEFAULT of 60 DAYS if no days are written.
However, the number of days is NOT SET so the duration will be up to each individual buyer.
The Brokerage and Agent Names
The BSA will be an agreement with the BROKERAGE first and then the AGENT will be appointed as your representative.
The TYPE of AGENCY
There will be TWO options, EXCLUSIVE and NON-EXCLUSIVE AGENCY. The agreement must have a CHECKBOX that allows the buyer to SELECT which type of representation they are granting.
We discuss the differences between the two types HERE.
Limited Dual Agency Consent
The buyer (and seller with listing agreements) must AUTHORIZE the agent for Limited Dual Agency. The authorization must also be done PRIOR to signing the Buyer Brokerage Services Agreement AND before entering into discussions for any Purchase and Sale.
The authorization can be REVOKED or GRANTED by Amendment after the initial agreement is signed.
Terms of Compensation
The agreement must contain the amount that the principal (buyer) agrees to compensate the Brokerage for the agent's services as an AGENT and/or LIMITED DUAL AGENT.
The buyer must authorize terms for compensation sharing between firms and all parties as well as for the Firm by more than one party.
Agreement to NOT SHOW PROPERTIES
It must be disclosed if the Brokerage will NOT show properties or listings where there is:
1. No Seller Compensation offered to Buyer Brokerage or
2. No compensation is offered from the principal (Buyer) to compensate the Brokerage outside of Seller offers.
The Brokerage is within its right to not even let the buyer know if a property there is no compensation.
All Other Agreements...
All terms in the agreements must be agreed to and should be contained in the Buyers BSA.
EXAMPLE Buyer Brokerage Services Agreement
Listing of the Parties
The agreement is between the Real Estate Brokerage Firm and the Buyer(s).
Definitions
Area
If left BLANK then the area will be ANYWHERE in Washington. The area can also be a single address, a city, zip code, or county!
Term
This is the term of the agreement. If left blank, it will be 60 days. There can be any length. The agreement can be extended as well.
Agency (Identify the Agent/Broker)
This is where the agent will be identified.
Agency (Relationship)
This is where the TYPE of relationship is selected. There are two options: EXCLUSIVE and NON-EXCLUSIVE.
- EXCLUSIVE is defined as the ONLY agent the buyer is going to work for for the duration of the agreement and the area that is selected.
- NON-EXCLUSIVE will allow the buyer to enter into other NON-EXCLUSIVE agreements with other brokerages and their agents.
Limited-Dual Agency
Buyer will inital here if they will ALLOW their agent to enter into an agreement as a LIMITED DUAL AGENT for the purchase of a property. Remember:
- If the buyer opts to allow Limited Dual Agency, this option needs to be initialed AT THE TIME OF THE AGREEMENT SIGNING.
- The agreement can be amended at any time to change the option of allowing/not allowing Limited Dual Agency.
Compensation
This is where the buyer will agree to the dollar amount or percentage of purchase price they will compensate the Brokerage Firm for services. Remember:
- There is no STANDARD PERCENTAGE or COMPENSATION RATE
- Compensation is always NEGOTIABLE between the individual agent and the buyer(s)
Compensation Rate
There are two sub sections to compensation:
- RATE of compensation in a normal transation
- RATE of compansation if Buyer Broker is allowed to be a Limited Dual Agent and represents both the buyer and the seller.
Buyer Brokerage Services Agreement pg 2
Seller Compensation Offer
This section handles the situations in which the seller makes an offer for compensation to the buyer's brokerage firm either through a listing in the Northwest Multiple Listing Service or in a contract or addendum. The selections are self explanatory, but for each subsection:
- Offer Equal to Compensation in Agreement- the buyer can accept offer knowing that they will not owe any additional compensation.
- Offer GREATER than Compensation in Agreement- examples of this might be if there were seller concessions or simply the Seller was offering greater compenation than was in agreement.
- Offer LESS than Compensatin in Agreement - The buyer may have to compensate the agent's brokerage firm, request the Seller INCREASE their compensation, or OTHER (likely Buyer's Brokerage Firm forgives the difference).
Compensation Terms
This section discusses the HOW, WHEN, WHERE of compensation payments.
- EXCLUSIVE AGENCY - whenever and whereever a purchase closes during the term of the agreement.
- NON-EXCLUSIVE AGENCY - the purchase closes and the Buyer's Brokerage Firm represents the Buyer in the transaction.
Compensation Terms (TAIL PROVISIONS)
TAIL PROVISIONS are when compensation is due for a set period of time (default 60 days if blank) AFTER the agreement EXPIRES.
- EXCLUSIVE AGENCY - Buyer purchases a property that was brought to the attention of Buyer during the Term by the efforts or actions of Firm, or through information secured directly or indirectly from or through Firm; or a property that Buyer inquired about to Firm during the Term. Compensation is due when the purchase closes.
- NON-EXCLUSIVE AGENCY - Buyer purchases a property for which Buyer Brokerage Firm presented a written offer to the seller on behalf of Buyer during the Term. Compensation is due when the purchase closes.
As you can see, the tail provision for EXCLUSIVE AGENCY would trigger a payment to the agent on the agreement AFTER ANY PROPERTY CLOSED ANYWHERE.
Compensation Terms (ADDITIONAL CONSENT)
Buyer consents to Firm receiving compensation from more than one party and to sharing
of compensation between firms, provided that any terms and amounts offered to or by Firm are disclosed as required by RCW 18.86.030 and any amounts paid to Firm reduce Buyer’s obligation to Firm.
This section would allow other Real Estate Brokerages that could or would be paying compensation as a result of a property selling to allow the Buyer's Brokerage Firm to collect compensation and offset any that would be owned to buyer in agreement.
Cancellation Without Legal Cause
For Exclusive Agency, if Buyer cancels this Agreement without legal cause,
Buyer may be liable for damages incurred by Firm as a result of such cancellation.
Example would be if under the agreement the broker provided services to buyer for a property and the buyer tried or cancelled the agreement in order to write the contract with another brokerage firm.
Showings, Listings, VA Financing
This section discusses the scenarios where:
- Agent is NOT required to show, or even let the buyer know exists, a property where the SELLER is not offering any compensation AND/OR the BUYER does not offer compensation to broker if not paid by seller.
- VA regluations PROHIBIT the VA Buyer paying compensation to Buyer's Broker. Seller must pay compensation.
Buyer Brokerage Services Agreement pg 3
No Warranties or Representations
Buyer is responsible for inspections and valuations of the property.
Inspection Recommended
Firm recommends that the buyer include an Inspection Addendum and allow for a LICENSED INSPECTOR to inspect the property. The Firm and Buyer Broker have no expertise in such matters and they should seek out a qualified professional.
Attorney's Fees
There are no provisions for mediation in the agreements. Any disputes will need to be handled through the courts. Provisions are made for the recovery for attorney fees for the prevailing party.