Touring DC Homes For Sale
DC Metro home buyers entering or re-entering the real estate market this year will find that stagnant mortgage interest rates, pricing fluctuations and revised broker compensation mandates are the new normal. Even the rules for touring homes have changed.
New Rules For Prospective Home Buyers
Touring And Agreements
What does ‘home tour’ mean?
Home tours are in-person or virtual showings of a home that is for sale. Touring affords buyers the opportunity to assess the home’s floor plan, style, condition, attributes and drawbacks. as well as to see the immediate neighborhood firsthand.
Homes can be toured in other ways, as well; via virtual tours and videos utilizing drone technology, anv during open houses.
Tours of properties listed by brokerages must be arranged via the listing agent. Typically the buyer’s agent makes these arrangements. If the buyer is unrepresented, it is still necessary to arrange private tours through the listing agent. Buyers may also attend open houses when advertised.
Must I Sign An Agreement Before An Agent Shows Me A Listing?
That is now a definitive requirement , yes. As a direct result of the National Association of Realtors (NAR) settlement with class action parties, real estate brokerages now require a signed agency agreement before touring homes with buyers. This may even affect how open houses and practices relating to ‘ministerial acts’ for unrepresented buyers are managed.
Not Just For REALTORS®
The rule applies to any MLS Participant, not just members of NAR. Those “working with” a buyer will be required to enter into a written agreement with the buyer prior to touring a home, including both in-person and live virtual tours.
While it has long been a recommended practice for agents to obtain a signed agreement prior to performing any work for a home buyer, it is no longer optional. The National Association of REALTORS® settlement, which is enforced by Realtor-controlled Multiple Listing Services, requires all MLS participants working with buyers to have a written agreement prior to home tours. This applies to NAR members, and other real estate agents, as well.
Witten agreements may include, but are not limited to, the GCAAR Buyer Agency Agreement, a one-time showing agreement, a limited services agreement, a ‘touring agreement’. Brokerages dictate which types of agreements and agency their affiliated agents may use.
The home buying process should begin with prospective buyers obtaining a pre-approval letter or funds verification letter (cash buyers) from a local, reputable lender, then interviewing agents and discussing agreements.
Open Houses And Ministerial Acts
Attending Open Houses
Buyers can search third party sites like Redfin or Zillow for a general overview of the market in their desired locations before deciding on representation, and attend open houses to see what various price points offer in the way of condition, square footage, finishes and other property attributes.
Open houses are the only exception to the requirement for a Buyer Agency Agreement prior to touring. Agents hosting open houses must be mindful of the restrictions of answering questions and providing information without a written representation agreement, so information provided at an open house is minimal. Buyers should also understand that the hosts of open houses are typically agents interested in meeting buyers who have not yet chosen an agent. They are not experts on the homes they host, and, like the listing agent, they are bound by the aforementioned restrictions. Many sellers do not offer open houses, or hold only an initial open house when the property is listed.
Unrepresented Buyers
Touring Homes As An Unrepresented Buyer
Touring homes as an unrepresented buyer creates numerous challenges for both the buyer and the listing agent.
Listing Agents
While listing agents want to facilitate all possible showings for their seller, touring unrepresented buyers creates issues for the listing agent:
Unrepresented buyers have not been vetted by an agent or lender. The listing agent can not be sure they possess the qualifications to purchase the home, intend to proceed with a purchase in a timely manner, or are even who they say they are. They will, therefore, typically be vetted by the listing agent before a showing is arranged;
Touring an unrepresented buyer increases liability for the listing agent. They risk accidentally breaching their duties to the seller or creating an unintended fiduciary relationship with the buyer. Accidental Dual Agency is a real concern. This occurs when a real estate agent unintentionally creates fiduciary duties to both the buyer and the seller in a transaction without proper disclosure or written consent by inadvertently giving too much information or advice, counseling, or strategic help to an unrepresented buyer, making the buyer feel the agent represents them. A violation of Accidental Dual Agency can result in loss of license, hence the reluctance by many agents to accept the risk;
Agents are tasked with ministerial duties when an unrepresented buyer writes an offer, frequently without additional compensation;
Listing agents may not be available, particularly on short notice, to meet a buyer for a showing. In the past, this task would often be assigned to a buyer agent, who would hope to gain the buyer’s business. Under new rules, however, a second agent can’t show the property without an agreement;
Some brokerages may allow the use of “touring agreements” for unrepresented buyers. This practice may or may not involve a fee, and the terms of these agreements vary according to their source. Agents participating in this practice are often new licensees who are hoping to gain business in this manner.
Unrepresented Buyers
Buyers can’t count on attending open houses to access the full scope of available inventory since only a percentage of listings hold open houses, or hold only an initial open house when the listing debuts;
Unrepresented buyers will not have access to off-market listings as they are not displayed on third-party websites. A significant portion of DC real estate is listed, at least initially, as ‘pocket listings’ or ‘private exclusives’ on broker private networks;
Unrepresented buyers will not be the beneficiaries of fiduciary protection. Listing agents legally represent the seller. Their duties to the seller include securing the best possible price and terms. The unrepresented buyer has no advocate;
Listing agents may not have the urgency of a dedicated buyer agent to schdule private showings;
Unrepresented buyers risk accidental dual agency;
Without independent market insights or objective guidance, buyers can easily misjudge property conditions, overpay, or miss critical contractual deadlines.
Best Practices For Unrepresented Showings
We suggest that unrepresented buyers wishing to tour a listing:
Be prepared with a pre-approval letter from a local, reputable lender whose contact information is included on the letterhead and offer it to the listing agent, or proof of funds (cash buyer) from the buyer’s financial institution;
Be prepared to sign a disclosure agreement or waiver;
Request tours as far in advance as possible to accommodate the listing agent’s schedule;
Ask if there are any showing restrictions (such as 24 hour notice to tenant, or showing days/times restricted by homeowner occupant);
Put your request in writing (email or text) in addition to making a phone call for the best chance of receiving a timely response;
Attend an open house instead if one is available;
Find an agent willing and able to effect a touring agreement to show the property.
What Are Ministerial Acts?
A ministerial act is an action performed in a specific way and according to legal authority, without using personal judgment or discretion. In District of Columbia real estate practice, ministerial acts are routine tasks that a real estate licensee can perform for a person without using their own judgment or discretion. These tasks are administrative in nature and support the transaction without providing advice or representation.
According to NAR’s definition of ‘working with the buyer’, listing agents are permitted to:
Provide access and answer general questions
without any document being signed.
Beyond those two things, the listing agent would be considered ‘working with the buyer’ and a Buyer Agency Agreement must be signed.
Defined By Code
“Ministerial Acts”, as defined by DC code:
The term “ministerial acts” means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee’s own judgment.
Code of the District of Columbia | Real Property
§42-1702
Para. 8A; Subchapter I. General §§ 42-1701 – 42-1709
DC code also includes the following:
(3) A licensee engaged by a seller in a real estate transaction may, unless prohibited by law or the brokerage relationship, provide assistance to a buyer or potential buyer by performing ministerial acts. Performing such ministerial acts that are not inconsistent with this subsection (a) of this section shall not be construed to violate the licensee’s brokerage relationship with the seller unless expressly prohibited by the terms of the brokerage relationship, nor shall performing such ministerial acts be construed to form a brokerage relationship with such buyer or potential buyer.
Code of the District of Columbia
Duties of real estate brokers, salespersons, and property managers
§ 42–1703
In Virginia:
The term “ministerial acts” means those routine acts which a licensee can perform for a person which do not involve discretion or the exercise of the licensee’s own judgment.
Code of the District of Columbia | Real Property
§42-1702”
Subchapter I. General §§ 42-1701 – 42-1709
Procuring Cause
What is ‘procuring cause’ and how does it affect buyers and sellers?
Procuring cause as it relates to real estate identifies the brokerage earning compensation as a result of an uninterrupted chain of actions that assisted the buyer in purchasing a property.
The agent who initiates a series of events or activities that leads to the sale is considered the procuring cause. This could include activities such as finding interested buyers, arranging showings, negotiating offers, and facilitating the transaction. This does not mean that showing the property defines procuring cause.
The agent who tours the property with the prospective buyer is not necessarily the procuring cause of the sale, and the fact that an agent was not the one to cross the threshold with the buyer for the first time does not prevent an agent from being the procuring cause. Instead, factors in procuring cause are timing, efforts and influence, and the entire course of events.
In a procuring cause dispute, an arbitration hearing panel reviews these factors to determine which broker qualifies as the procuring cause of the sale.
Buyers And Procuring Cause
If a buyer enters into multiple non-binding touring agreements, enters into non-exclusive buyer agency agreements with multiple brokers, or changes agents during an offer or sale transaction, a dispute regarding procuring cause may arise
Offers of seller cooperative compensation are no longer guaranteed by the MLS
Disclaimer
Posts are offered for informational purposes only and should not be construed as financial or legal advice, design or construction advice. Home buyers and sellers must always perform their own due diligence and seek counsel from licensed professionals such as CPAs and attorneys when making choices relating to a real estate transaction. We do not endorse individual service providers and citations should not be considered endorsements.