State of Alabama "Buyers can tour a home without a contract"

[GON]

Watching a video by Real Estate blogger Jared James.

A discussion came up about a new National Association of Realtors (NRA) I guess imposed federal law that for a potential buyer to tour a home being listed, a buyer's agreement is mandatory between the real estate agent showing the home, and the person/ people requesting to tour the home.

The state of Alabama has an issue-- that a buyer's agreement is a very lengthy and detailed legal contract. Alabama contends it is unreasonable to expect a person/people touring a home for sale, have the time to read through and comprehend a buyer's agreement.

I concur with the State of Alabama. No buyer's agreement should be signed with a without a legal review. A legal review not only costs money but can take time for a lawyer to read and respond.

My recommendation is a home buyer have their own "buyer's agreement" to present to the showing realtor. Something like the "showing realtor" is entitled to $10 USD for compensation for showing the home, as full and total fees and obligations. If course, optional paragraph can be that the person showing the home may compete to be the "buyer's agent" on the home they showed, but in no way is there any binding agreement.

This is a separate issue than signing an agreement with a realtor to be a buyer's agent. One may contract with a realtor to be a buyer's agent. State of Alabama is primarily concerned with an interested party see a property for sale, let's say an open house. Realtor at the open house states to see the home a buyer's agreement must be signed. The fine print in the "buyer's agreement" might have fine print like "any home you buy over the next year, I this open house realtor am entitled to three percent of the sale price.

Of course, if you present your own "buyer's contract", I am sure the realtor will say the NRA contract is only acceptable. Which if it is, then that is a bad thing.

Two years ago, a friend was transferred to San Antonio, TX. He went to buy a home and signed a buyer's broker agreement. After making a few offers, he found the buyer's agent incompetent. The broker of the buyer's agent contacted him and stated that he was obligated to purchase through the buyer's agent he contracted with for one-year, and if he purchased a home through another realtor, he is still required to pay the incompetent agent and her broker the three percent fee.

https://www.housingwire.com/articles/alabama-law/#:~:text=Alabama governor Kay Ivey has,a home with an agent.

This is the video on the subject. I only found it on Facebook, I tried youtube but no success. Apologies in advance, I know many can't view Facebook videos.

 

[mk378]

If you have people willing to buy a house without seeing the inside, sure. But that means your price is too low.

 

[97prizm]

If you have people willing to buy a house without seeing the inside, sure. But that means your price is too low.

Or you live in Colorado and housing goes so quick alot sign the day it comes on the market.

 

[dnewton3]

Like most any law on the books, the intent was to solve a (perceived) problem when multiple agents were to split commissions. A seller might engage his agent at X%, whereas the buyer might have negotiated Y%, and therefore arguments about realtor compensation would come up.

Enter well-meaning folks and a slew of lobbyists ... All they've done is make things worse. I've said it a thousand times if I've said it once on BITOG; there is a concept called the "Law of Unintended Consequences". Laws and regulations get made in an attempt to cure some perceived problem, only to create other problems which often are more intrusive and cumbersome than the one which preceded them.

I, for one, abhor this new law. It borders on coercion, making one feel compelled to get into a contract for representation, even when only curiosity is in play. My wife and I recently were looking at homes in the Phoenix area, and there was a significant pressure felt to be "represented", even though we were only "home-curious" about the general flavor of the market, and being from the Midwest, we were discovering that many things are different "out west" in terms of home features and design. I was 100% honest up front when we made appointments for home viewing; we were just testing the market and purchase was a distant likelihood.

And I also wonder how this new national law can be truly "legal" for most home sales. For a national law to be applicable, the sale must be "interstate" related, as Congress only has authority over "interstate commerce". For any in-state (intrastate) sale, then only state laws would apply. If a buyer is from another state I could reasonably understand the application. The argument is that sales are always "available" to all people, from any location on the planet. But if you live locally, and buy locally, why would you need to satisfy this law? IMO, it's an overreach which satisfied only one group of people ... the realtor lobbyists.

GONs point, that echoing Alabama's position, is that these are legal contracts and often are very intense in language and nuances, etc. To expect someone to just sign a detailed contract to "view" a home is ridiculous in that it places undue pressure and expectations on the casual observer. Even if you are serious and intend to buy a home soon, there's no way such a contract should be reasonably expected for such a casual interaction as just viewing a home.

IMO the federal law needs to be further refined. First, as I said, if it's a intrastate sale, then it should not apply at all. However, if that's a hurdle the legislature can't get over, then at least modify the concept such that the contract will ONLY be required when offers/price negotiations are to start. Until you intend to make a move financially on a home, there is no real "need" for a contract.

 

[alarmguy]

The whole thing is a big nothing.
50 states they all have their own laws, maybe Alabama is more complicated. But I doubt it. This is just another YouTuber.

Buyer agreement could be a simple form covering that one house that the buyer wants to see.

No disrespect to the OP, but his post is more commentary and an opinion piece.

As far as what happened to his friend, Well due diligence on what you’re signing comes into play there. He chose to sign a one year agreement. He could’ve found an agent who was willing to sign a 30 day agreement.

 

[dnewton3]

Further, it occurred to me how to illustrate how stupidly absurd this law is. Imagine if it were applied to other purchases like vehicles ... Let's face it; they've become almost expensive as a home, and vehicles represent probably the second most expensive "purchase" one will ever make, typically.

Would you be willing to sign a contract with the salesperson, and/or the dealership, to be "represented" for a period of some duration (often 6 months to a year), at some pre-agreed % of compensation, before you ever sat in a car on the lot, let alone took it for a test drive?

 

[dnewton3]

The whole thing is a big nothing.
50 states they all have their own laws, maybe Alabama is more complicated. But I doubt it. This is just another YouTuber.

Buyer agreement could be a simple form covering that one house that the buyer wants to see.

Yes- that was the suggestion.

No disrespect to the OP, but his post is more commentary and an opinion piece.

As are most GaOT threads here. What's your point? GON wasn't presenting this as anything else.

As far as what happened to his friend, Well due diligence on what you’re signing comes into play there. He chose to sign a one year agreement. He could’ve found an agent who was willing to sign a 30 day agreement.

Uh .... good luck trying to find an agent willing to do 30 days. That would be unheard of in many areas of the country.

 

[SC Maintenance]

AI will replace a buyers agent with an app on your phone. The app will schedule the appointment and get your input on different things while touring so it can pair you with a better home for the next visit.

When your ready to make an offer you will use an actual attorney that is your fiduciary rather than an agent that cares only about their 3%.

The Alabama law is good in that it moves us closer to that point. The U.S. real estate market is utterly broken.

 

[alarmguy]

Yes- that was the suggestion.



As are most GaOT threads here. What's your point? GON wasn't presenting this as anything else.



Uh .... good luck trying to find an agent willing to do 30 days. That would be unheard of in many areas of the country.

I was the buyers agent in two states. A buyer sign can sign a form, even to look at one house and would be obligated for that house only.

The government does not dictate how long a contract lasts or the time period.
We happen to live in a free country, and if an agent doesn’t want to do an agreement like that, they don’t have to be forced to servitude it to by the government.

Gon unless I read something incorrectly in his OP was offering suggestions on how things could take place. That is an opinion.

The fact of the matter is no buyer is forced to do anything with a buyers agent. The forms are blank you can fill in any amount of days. The agent can fill in any amount of days that the buyer would be obligated. The buyer cannot force the agent to work for them.

Being we live in a free country, of course that buyer agent or his company can pre-print form specifying the number of days. Typically it is blank, but by all means as an agent, I could pre-print anything and not work with any buyer if they don’t agree with my terms.
I can’t even charge the buyer upfront fees without them even finding a house. The buyer has the option to say no and walk away. I don’t get all this nonsense. Buyers and buyers agents are free to work or not work with whoever they want under any conditions.

There are so much misinformation on representation and rule of law.
The reason for this I suspect is because people typically only buy one or two houses in their lifetime on average

 

[eljefino]

The government does not dictate how long a contract lasts or the time period.

The government does have the ability to restrict or void an "unfair contract", one that violates a law. Contracting to work for a dollar a day counters minimum wage laws and is unenforceable.

That said, this looks like a very annoying situation for the home seller-- your realtor is on your steps selling their services first and your home second. It's like when you have an auctioneer sell off your estate furniture but they brought their own junk to your house as well.

The obvious BITOG example is buying a top off quart of Amsoil at a NAPA, but then having that NAPA being "your" dealer for all future products for their commission purposes.

 

[alarmguy]

The government does have the ability to restrict or void an "unfair contract", one that violates a law. Contracting to work for a dollar a day counters minimum wage laws and is unenforceable.

That said, this looks like a very annoying situation for the home seller-- your realtor is on your steps selling their services first and your home second. It's like when you have an auctioneer sell off your estate furniture but they brought their own junk to your house as well.

The obvious BITOG example is buying a top off quart of Amsoil at a NAPA, but then having that NAPA being "your" dealer for all future products for their commission purposes.

Your post shows the lack of an informed public.
Your realtor represents the Home seller
Another realtor represents the homebuyer

As far as unfair contracts, almost every aspect of business in the United States is based on a contract

No Home seller and no home buyer is obligated to work with a real estate agent.
It’s a service they purchase, just like getting your oil changed

 

[dnewton3]

I do agree that any contract between potential buyer and prospective buyer agent can be set up, with limits by any applicable laws, to the nature which best suits those two entities. Same goes for the sellers. Your point is also valid; no one is required to engage with a buying or listing agent, AFAIK. But ... without those agents, many folks are lost and cannot navigate the legal nuances of home sales and purchases. (It's no different than some folks not being able to fix their own cars; they must engage in an industry expert (Indy mechanic or dealership) because they have zero ability to deal with the issue on their own.) And so for many, these buy/sell agents are a must-have in their lives.

As far as the term of duration goes, the problem comes when the agents collectively act in concert with each other (willingly or otherwise) and won't sign "one day" (short term) contracts, etc. In the Midwest, 6 months is pretty much the norm. It's likely this is a regional issue.

 

[Owen Lucas]

I did not use a real estate agent for a family member's home purchase and sale. We toured houses no problem.

Sale:

• Listed property online for $100 to get into MLS.
• Took my own pictures, of which were on par with professional photos just using a cell phone.
• Accepted phone calls and scheduled showings.
• Used attorney for $1500 to settle documents.
• Saved $1000s

Purchase:

• "Hi, I'm interested in your property."
• "Do you have an agent? No, we have an attorney"
• "(pause).....Ok when would you like to see it?"
• Attorney does paperwork.
• Done.

Having a contract to show a home is pretty dumb, what do you do with an open house or in one of these, sold-in-a-day markets? Real-estate is a borderline scam and AI will solve this somehow.

 

[Pelican]

Much ado about nothing! I was a Realtor many years ago and would not take on a client
without a Buyer Representation Agreement, reason is to protect the interest of the Seller and my own time.
If something is stolen or broken while showing who'll be held responsible?
The Realtor showing the property, and then without legal Agency Status how is said Realtor going to recover.
As a Seller I'd not allow a Realtor without a Legal Agency Representation to show my property.
As others have said such document can be drawn to last 1 day or 1000 days. The only reason not to have one IMO would Gross Negligence on the Realtor's part and leave the situation open to scammers.

 

[GON]

Much ado about nothing! I was a Realtor many years ago and would not take on a client
without a Buyer Representation Agreement, reason is to protect the interest of the Seller and my own time.
If something is stolen or broken while showing who'll be held responsible?
The Realtor showing the property, and then without legal Agency Status how is said Realtor going to recover.
As a Seller I'd not allow a Realtor without a Legal Agency Representation to show my property.
As others have said such document can be drawn to last 1 day or 1000 days. The only reason not to have one IMO would Gross Negligence on the Realtor's part and leave the situation open to scammers.

I have viewed countless homes over the years without a "Buyer Representation Agreement". There is a huge difference between showing a home and contracting a buyer's broker.

On the last home we sold, the listing broker offered me a discount to earn my business. I refused the discount; I wanted to pay full commission and receive full service. I did my homework. Listing broker did an awesome job, home sold to first person that toured the home.

Of note, I had many realtors want to sell the home, and some for reasons that had nothing to directly do with selling the home. The home was on a very nice lot, had huge daily vehicle traffic, and home looked smaller from the highway- thus generating many calls per day. The listing agent on the home had the potential for a lot of phone calls, and "new leads".

Life experience states 10 percent of realtors are worth more than they charge. The other 90 percent are worth significantly less than they charge. Not sure how savvy homeowners are in picking a listing or buyers broker, but math is unquestionably against the home seller or homebuyer in getting their money's worth. And the contracts are not normally easy to break- one is often "stuck" with who they contract with.

As posted on BITOG on another thread, we (my Wife) keep our homes spotless, updated, and in perfect condition. Years ago, we listed a townhome we owned. Cherry hardwood floors with Brazilian inlays, drop dead gorgeous kitchen, we replaced all the interior doors with solid doors, all new trim and crown molding- simply a townhome at a designer magazine level. The only thing we didn't have updated in the home was the front door, as the townhome HOA prevented front door replacement for uniformity. The inside of the front door was unattractive- but who looks at the inside of the front door- the rest of the home was to die for. Wife hired a broker from a grocery cart ad that said "#1 realtor in Deer Valley".

Listing broker had pictures taken, and the featured/ first photo was of all things---- the inside of the front door. I could not believe it. I fired the listing broker the same day. Hired a new listing broker. The new listing broker did proper picture and description listing. The townhome sold to first person who toured it.

I have numerous other examples, but I firmly stand by the 10/90 rule when it comes to realtors--- 10 percent are worth significantly more than they are paid, 90 percent of realtors are worth significantly less than they are paid. Math is not on the side of the home buyer or home seller.

 

[nomas]

I've never heard of these agreements . If I want to go look at a house I call the listing Agent and make an appointment .

 

[alarmguy]

I do agree that any contract between potential buyer and prospective buyer agent can be set up, with limits by any applicable laws, to the nature which best suits those two entities. Same goes for the sellers. Your point is also valid; no one is required to engage with a buying or listing agent, AFAIK. But ... without those agents, many folks are lost and cannot navigate the legal nuances of home sales and purchases. (It's no different than some folks not being able to fix their own cars; they must engage in an industry expert (Indy mechanic or dealership) because they have zero ability to deal with the issue on their own.) And so for many, these buy/sell agents are a must-have in their lives.

As far as the term of duration goes, the problem comes when the agents collectively act in concert with each other (willingly or otherwise) and won't sign "one day" (short term) contracts, etc. In the Midwest, 6 months is pretty much the norm. It's likely this is a regional issue.

Well said and I can understand your concern. So goes life I guess. We are not a forced labor country. People will have to hunt for someone to take less than 6 months. I would find it hard to believe that they cannot, most agents are part time agents who will sell their souls (and commission rate) for anything. Once in a very great while, as a listing agent, a buyers agent would be putting together a deal which involved cutting commission both the buyer commission and ask me to cut my listing commission. The first words out of my mouth when approached with a deal from the buyers agent was always "that is not going to happen" the buyers agent would always cave in.

.... and in the rare case my homeowner asked me if I would cut my rate my response would be kinder and I would simply say "I have my own family to care for, why would I give my income to a stranger ?"
It's the professionals that will not cut because they believe in what they do and they do not have to.

If they can't find someone, then they have to go it alone OR go to a new home builder. Most production builders do not require a buyers agent and they will all show their homes.

 

[Hall]

The government does have the ability to restrict or void an "unfair contract", one that violates a law. Contracting to work for a dollar a day counters minimum wage laws and is unenforceable.

What is your point ? If a buyer and buyer's agent agree to a 30-day contract, a) it's not illegal and b) how is it unfair ? Sorry, I have a hard time accepting that any agreement is "unfair" when both parties agree to sign it. If you or the other party feel it's unfair, ready.... this is a strange concept.... don't sign it !

 

[alarmguy]

I was the buyers agent in two states. A buyer sign can sign a form, even to look at one house and would be obligated for that house only.

The government does not dictate how long a contract lasts or the time period.
We happen to live in a free country, and if an agent doesn’t want to do an agreement like that, they don’t have to be forced to servitude it to by the government.

Gon unless I read something incorrectly in his OP was offering suggestions on how things could take place. That is an opinion.

The fact of the matter is no buyer is forced to do anything with a buyers agent. The forms are blank you can fill in any amount of days. The agent can fill in any amount of days that the buyer would be obligated. The buyer cannot force the agent to work for them.

Being we live in a free country, of course that buyer agent or his company can pre-print form specifying the number of days. Typically it is blank, but by all means as an agent, I could pre-print anything and not work with any buyer if they don’t agree with my terms.
I can’t even charge the buyer upfront fees without them even finding a house. The buyer has the option to say no and walk away. I don’t get all this nonsense. Buyers and buyers agents are free to work or not work with whoever they want under any conditions.

There are so much misinformation on representation and rule of law.
The reason for this I suspect is because people typically only buy one or two houses in their lifetime on average

Correction!

I can’t even charge the buyer upfront fees without them even finding a house.

Should be ..

I can charge the buyer upfront fees without them even finding a house. (most do not) A fee just to show them homes whether they buy one or not. I remember even two decades ago some agents in some parts of at the country would charge $500 upfront fee.

 

[Owen Lucas]

Much ado about nothing! I was a Realtor many years ago and would not take on a client
without a Buyer Representation Agreement, reason is to protect the interest of the Seller and my own time.
If something is stolen or broken while showing who'll be held responsible?
The Realtor showing the property, and then without legal Agency Status how is said Realtor going to recover.
As a Seller I'd not allow a Realtor without a Legal Agency Representation to show my property.
As others have said such document can be drawn to last 1 day or 1000 days. The only reason not to have one IMO would Gross Negligence on the Realtor's part and leave the situation open to scammers.

Do you need an agreement for an open house?

Why not and what is the difference between that and showing to some random potential buyer?

I had no issues scheduling showings without agreements.