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Ohio Realtors Advocating For Buyer Representation Agreements After Commission Lawsuits – Who Benefits?

Should Buyers be required by Ohio law to sign Buyer Representation Agreements–commonly referred to as Buyer Agency Agreements–when purchasing real estate with the assistance of a real estate professional?  Who benefits from such agreements? We answer these questions and more in the following article, so read on.

The Push for Buyer Representation Agreements

Buyer Agency Agreements have been strongly encouraged by Ohio Realtors, formerly known as the Ohio Association of Realtors, to ensure their members receive compensation for services rendered after numerous lawsuits resulted in millions of dollars in settlements. The National Association of Realtors (NAR), various Boards of Realtors and numerous Real Estate Brokerage firms have litigation pending for failure to adequately disclose the source of commissions and/or price fixing.  Evidence came to light during litigation in which it became clear Realtors representing Buyers had misinformed their clients by stating they were working for free, when in fact commissions were built into the sales price of the home and paid via the Seller’s proceeds at closing. This adversely impacted the Buyer’s bottom line. While hundreds of lawsuits are forthcoming or still in process, some brokerages have settled lawsuits for millions of dollars, including Keller Williams. 

Transparency and Consumer Advocacy Concerns

As the Real Estate Broker and Owner of Ohio Broker Direct, I do believe there is a need for Buyer Representation Agreements, HOWEVER, in advocating for both the consumer (Buyer) who is seeking to purchase real estate, and Real Estate Professionals–including non-members of Ohio Realtors who are rendering services–I find the statement in the Ohio Realtors January 31, 2024 newsletter regarding said legislation disconcerting. The Statement reads “Ohio Realtors is working with stakeholders on drafting a proposal.” Who are the stakeholders? Are consumers and non-member Brokers and Agents throughout Ohio included in the discussion?  

Noting the tarnished reputation of the National Association of Realtors, I genuinely believe any legislation should incorporate the opinions of consumers, member and non-member real estate brokers, their agents, and real estate attorneys throughout Ohio in a neutral, all-inclusive manner.  It would not be difficult for The Ohio Division of Real Estate to survey all active Brokers and Agents to ascertain their thoughts. Upon completion, the Ohio Division of Real Estate could submit their findings, along with recommendations of their own legal counsel, as well as those provided by Ohio Realtors, to the appropriate legislative committee considering creating such legislation. The Ohio Division of Real Estate has a clear obligation to protect the consumer, whereas many stakeholders of Ohio Realtors have set historical precedent in which their primary focus has been both their bottom line and membership.

The Ethical Dilemma in Buyer Representation

My opinion is supported by the following statement in the same issue of the Ohio Realtors newsletter by Ohio Realtors Vice President of Government Affairs Andre Huffman: “By requiring written representation agreements, homebuyers will have a clear understanding of what services they should expect as well as the commission structure of their broker. It will also provide security and assurances to a brokerage before they spend countless hours with a client.”  The statement “countless hours with a client” infers the agent’s time may be wasted, however there appears to be no accountability when an agent wastes a client’s time.  

How many times have Buyers lost out on an opportunity to purchase a piece of real estate because they were bound and obligated by a Buyer Agency Agreement to facilitate all negotiations through their agent and their agent could not be found? These agreements often extend for six months with an overlapping look-back period of up to 18 months. Yet when a Buyer Agent is unresponsive to the Buyer, the Buyer has little to zero recourse.  

Did you know NUMEROUS boards of Realtors throughout the state of Ohio and the entire country had been complicit in deceiving Buyers nationwide? They intentionally created the search capability for Buyer Agents to set their Buyer’s real estate searches, limiting the Buyer’s exposure to only listings offering a certain percentage of commission, rather than providing access to ALL properties that met their Buyer’s criteria. That is NOT ethical Buyer representation and yet Ohio Realtors and their stakeholders seem to believe they are the best avenue for creating a proposal. 

Advocating for Ethical Change

In the interest of disclosure, When I learned of this search exclusion capability in the MLS, I immediately logged into various MLS databases, ran my own searches, screen-shotted said searches, and called each MLS directly, stating that I found this to be inappropriate behavior. The response from each was that their search criteria is deemed to be acceptable and made it clear it was approved by the National Association of Realtors (NAR), and refused to remove such search capabilities. I then reached out and forwarded a copy of my findings to the attorney for REX knowing they had sued the NAR, as well as other contact sources including one who was in direct communication with the DOJ regarding litigation, and numerous Brokers and Agents in multiple states whose clients may have been adversely affected by this policy. Many of those Brokers and Agents immediately facilitated research in their own MLS, which verified this was occurring nationwide. They sent their findings to those they believed would best advocate for the consumer as well. The NAR has since required ALL Boards of Realtors to remove said search criteria from their respective MLS. To be clear, I am not in any way taking credit for this change–I am sharing an example of how I have personally advocated for what is right, and this is a clear example of why the Ohio Realtors and their stakeholders should not be drafting policy that would impact ALL member and non-member real estate professionals and their Buyers, when there’s a proven history of violating ethics and misrepresenting the best interests of both membership and the consumer. 

I am hopeful the legislative body, the Ohio Department of Commerce, Ohio Division of Real estate, Attorneys, Real Estate Brokers and Agents work together in a collaborative effort to create a customizable Buyer Representation Agreement. I am hopeful this Buyer Representation Agreement would allow ample space to insert customizable terms and fees, whether they are paid hourly, service based, a flat dollar amount or percentage based, and more. This document is likely to be required for all aspects of real estate–commercial, development, farm, land, retail, residential, rental, office–and should include language advising the Buyer to consider seeking legal counsel regarding this document as well as all aspects of the sale or purchase of real estate. A Buyer Representation Agreement should also include language allowing the Buyer to terminate the agreement without recourse, should their Agent/Broker fail in their fiduciary duty to represent the Buyer’s best interests.

The Current State of Buyer Agency Disclosure

An Agent or Broker is required to present a potential client or customer with the Consumer Guide to Agency prior to gathering information and offering representational services. The Buyer has the option to acknowledge receipt by signing it, or if they decline to do so, the Agent or Broker can note on the document the date and time and the fact the Buyer declined to sign it for their files. The Consumer Guide to Agency does not imply or create a contract between the consumer and the Buyer Agent or Brokerage. Should the Buyer later choose to retain the services of said Agent or Broker, a Buyer Representation Agreement can be prepared and signed in accordance with terms agreeable to all parties.

I recently wrote an article about Buyer Agency Agreements when I learned a Buyer who had purchased one of my listings was unaware they had signed one, as it had been slipped into their purchase offer documents. They had been led to believe the Seller was paying the entirety of the commission. It is imperative consumers do their own due diligence prior to entering into any agreement, as they are accountable for their actions as well.

Vision for a Fair Buyer Representation Agreement

In summary, the discourse on Buyer Representation Agreements in Ohio underscores the need for clarity, fairness, and ethical practices in real estate transactions. At Ohio Broker Direct, we are committed to fostering an environment that protects and empowers consumers and professionals alike. We welcome your insights and encourage a dialogue on this pivotal topic. For further discussion or questions, please don’t hesitate to contact us. For ongoing updates and information, be sure to visit our blog. Together, we can navigate the complexities of real estate with integrity and informed confidence.

Ohio Broker Direct & its Brokers or Associates assumes no responsibility or liability for any errors or omissions in this blog, we advise all participants in buying or selling real estate to enlist the services of a Real Estate Attorney.

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Joan Elflein

Joan Elflein is the Principal Broker and founder of Ohio Broker Direct. Joan has been a dynamic presence in the real estate industry since 1983, overseeing transactions totaling over a billion dollars. In the early 2000s, she founded Ohio Broker Direct, a flat fee brokerage firm that champions ethical practices and client empowerment. With a philosophy centered around providing personalized, cost-effective services, Joan and her team have saved Ohio sellers millions in commissions by offering innovative For Sale By Owner services alongside tailored Flat Fee MLS listings. Her firm's commitment to transparency and support has earned an A+ rating from the Better Business Bureau and made a significant impact on Ohio real estate through both booming and challenging market conditions. With four decades of real estate experience, Joan continues to offer professional service and personal care, ensuring that every interaction with Ohio Broker Direct meets the highest standards of excellence and integrity.

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