It is great to see Ohio Broker Directs’ long-standing advocacy for transparency and fairness in real estate commissions finally come to fruition. The recent judicial decisions and policy changes are significant steps towards ensuring full disclosure and accountability in the industry.
For decades, the traditional real estate model has often placed a heavy financial burden on both Sellers and Buyers. Sellers had to incorporate high commission fees into the listing price, which could lead to higher taxes and reduced deductions. Buyers, on the other hand, faced increased mortgage interest, insurance premiums, and property taxes due to inflated home prices.
Ohio Broker Directs’ approach, allowing Sellers to decide on the compensation offered to Buyer Brokerages, provides much-needed flexibility and can lead to substantial savings. Our flat fee MLS listing model not only empowers Sellers but also promotes a more transparent and fair real estate market.
REVIEW THE FOLLOWING CHANGES: LEARN HOW THEY WILL IMPACT YOU AND YOUR MLS LISTING(S) MOVING FORWARD:
Effective August 1st, 2024, Ohio Broker Direct LLC is implementing changes to ensure compliance with Multiple Listing Service (MLS) regulations and the passage of Ohio House Bill 466 signed by Governor Dewine on July 24, 2024. “The bill requires real estate brokers and salespersons to enter into written representation agreements with their clients and details certain terms that written agreements must contain. However, the bill applies this requirement only to agreements for the sale or purchase of residential real property with one to four dwelling units and leases of residential premises exceeding 18 months. “The bill requires real estate brokers and salespersons to enter into written representation agreements with their clients and details certain terms that written agreements must contain. However, the bill applies this requirement only to agreements for the sale or purchase of residential real property with one to four dwelling units and leases of residential premises exceeding 18 months. In particular, the bill requires these written agreements to include a statement that the broker or salesperson is appointed as an agent of the client, whether the agency relationship is exclusive or nonexclusive, and the terms by which the broker or salesperson is compensated. The agreement also must contain a statement that the broker fees and commissions are not set by law, are fully negotiable, and may be paid by any party. These agreements are optional under current law. Making agreements mandatory for these certain residential real estate transactions is unlikely to have a significant impact on the number of complaints filed with the Enforcement Section of the Division of Real Estate and Professional Licensing in the Department of Commerce. The bill’s impact on courts, which would handle civil litigation related to real estate contract disputes, is unclear. But in all likelihood, it would reduce the volume of such cases that might arise.”This information was derived from the Ohio Governor’s official website and can be read in its entirety download (ohio.gov) .
*All Multiple Listing Services (MLS) are required to remove any offers of compensation (commissions) from the MLS to ensure compliance with regulations.
*Some, not all MLS services, are adding Concessions Fields to the Sales Price Fields in the MLS. Ohio Broker Direct LLC has implemented an office policy in which our listings will reflect NO or NONE in that field, as ALL terms and conditions of the purchase agreement (contract) are to be negotiated in the purchase agreement itself. It is irresponsible to either infer or state the Seller will offer concessions without first having reviewed the terms incorporated into the purchase offer.
CONCESSIONS ARE TO BE NEGOTIATED IN PURCHASE AGREEMENT (CONTRACT):
SELLER CREDIT: The Negotiation of Seller Paid Credit,either a flat dollar amount or percentage of the sales price, towards Buyer pre-paids, points, closing costs, Buyer paid compensation (commission), or any other credit as approved by the Buyer’s lender.
BUYER CREDIT: The Negotiation of Buyer Paid Credit,either a flat dollar amount or percentage of the sales price, towards Seller closing fees, Seller paid compensation (commission), conveyance fee, property taxes prorations, title insurance policy or any other credit as approved by the Buyer’s lender.
EXAMPLES:
- Buyer and seller hereby agree that Sellershall credit 2% of purchase price toward Buyer paid compensation/commissions, prepaids, points and/or closing costs.
- Buyer and seller hereby agree that Buyer shall credit 2% of purchase price toward Seller paid compensation/commissions, closing costs, conveyance tax, and/or property tax prorations through date of closing.
OHIO BROKER DIRECT ENCOURAGES ALL SELLERS TO INCORPORATE APPRAISAL GAP LANGUAGE TO COVER CONCESSIONS AND/OR ANY OTHER POTENTIAL GAP BETWEEN CONTRACT PRICE AND APPRAISED VALUE, SHOULD THE APPRAISAL COME IN SHORT OF CONTRACT PRICE.
BUYER REPRESENTATION AGREEMENT (BUYER AGENCY AGREEMENT) :
An Ohio Real Estate Buyer Representation Agreement (Buyer Agency Agreement) delineates the terms of the relationship between the Buyer, Buyer Brokerage and the Real Estate Agent. These elements ensure clarity and protect the interests of both parties involved in the real estate transaction.
- Parties Involved: Names and contact information of the parties involved.
- Purpose: Establishes a contractual and exclusive relationship empowering the Agent the right to locate and negotiate the purchase of real property on behalf of the Buyer.
- Term: Delineates the start and end dates of the agreement.
- Duties and Services of both the Buyer and the Agent:
- Buyer Obligations include, but are not limited to, cooperation and availability for showings, clarifying areas of interest and property specifics, obtaining financing pre-approval or providing verification of funds, and all other duties necessary to facilitate the transaction.
- Agent obligations include, but are not limited to, ensuring the Agent complies with all aspects of their fiduciary duties to the Buyer, as well as utilizing all of their professional resources and skills to facilitate the transaction.
THE BUYER AGENT DOES NOT REPRESENT THE BEST INTERESTS OF THE SELLER. IF THE SELLER HAS QUESTIONS THE SELLER SHOULD CONSULT WITH THEIR BROKER, AGENT AND LEGAL COUNSEL.
- Compensation: Delineates how and when the Brokerage will be compensated for their services.
- Dual Agency Disclosure: Delineates whether or not the Brokerage allows Dual Agency and the ramifications associated therewith whether the Brokerage allows it or not.
- Termination: Delineates the terms and conditions under which the agreement can be terminated.
COMMERCIAL REAL PROPERTY:
While MLS compensation (commission) removal applies to ALL listings in the MLS, many of you may wonder why HB466 and MLS Buyer Agency Agreements delineating compensation apply only to residential real estate and not commercial real estate.
House Bill 466 focuses on residential real estate to address specific transparency and fairness issues in the home-buying process. The bill mandates written agreements between real estate agents and their clients, including details on compensation, fair housing information, and exclusivity.
Commercial real estate transactions often involve different practices and complexities, such as buyers typically paying their own commissions. This might be why the bill’s provisions were not extended to commercial real estate and land brokers.
It’s a valid question. We believe future legislation should address these concerns.
Selling your home on your own with the assistance of a non-traditional Real Estate Brokerage will require both commitment and due diligence for which you may be rewarded by saving thousands of dollars in commissions. Maximizing marketing exposure is key. Joan Elflein, Broker has been in this industry for 4 decades, Tana Lantry, Broker has been in this industry for over a decade. Together we have SOLD well over a BILLION DOLLARS in Real Estate & Saved Sellers Millions of Dollars in Real Estate commissions.
