Alabama Realtors back law to change timing of buyer agreements

When the Department of Justice (DOJ) came out in opposition of buyer representation agreements as they are defined in the National Association of Realtors (NAR) commission lawsuit settlement agreement, Alabama Association of Realtors took notice.

The state trade group is currently championing a bill that would change state law to prevent a consumer from being forced to sign a buyer representation agreement before they can tour a property with a Realtor. The bill, known as House Bill 230, was filed earlier this month and is sponsored by State Representative Randall Shedd (R-Cullman). So far, the bill is faring pretty well, as it passed the house in a vote on Thursday. It will go to the Senate next week. 

Under the terms of NAR’s commission lawsuit settlement agreement, consumers must sign a buyer representation agreement with their buyer’s agent before touring a property. Nothing in the settlement defines how long the agreement may be for or if it must apply to one or many properties. Despite the flexibility provided, the DOJ still took issue with these agreements.

In a statement of interest filed in the Stizer/Burnett suit, less than 48 hours before NAR’s settlement went for its final approval hearing in late November 2024, the DOJ believes the buyer broker agreements have the potential to “limit how brokers compete for clients.”

“It bears a close resemblance to prior restrictions among competitors that courts have found to violate the antitrust laws in other proceedings and could limit — rather than enhance — competition for buyers among buyer brokers,” the DOJ wrote in its statement of interest.

Despite the DOJ’s filing, Judge Stephen R. Bough ultimately granted final approval to NAR’s settlement. But, the DOJ’s ominous statement that buyer representation agreements used as prescribed in the NAR settlement could be the source of future antitrust challenges did not sit well with Alabama Realtors. 

“The bill reaffirms Alabama’s existing RECAD framework, emphasizing early discussions of brokerage services and compensation, while protecting consumers from premature binding contracts,” a post on Alabama Realtor’s website states. 

According to Alabama Realtors, the bill clarifies that consumers in Alabama cannot be required to sign a binding contract to view a property. 

“The bill requires a written buyer agreement before an offer to purchase is submitted, ensuring clear terms of representation,” the post states. “This balanced approach aims to provide greater transparency and consistency for both real estate professionals and consumers.”

While the timing of when the agreement must be signed is different from what is outlined in the terms of NAR’s settlement, the bill includes many of the same provisions for the buyer’s agreement. Some of these requirements include that the terms of how the agent is to be compensated and how much the agent will be compensated are clearly stated in the agreement. 

“You want to be able to establish a relationship with a professional you’re going to be working with. That’s one of the biggest complaints from consumers,” Jeremy Walker, the CEO of Alabama Realtors, said on an episode of Capitol Journal on Wednesday. “They may see a property listed or know someone and want to work with them and see a property, but they don’t want to be forced into a buyer agreement too soon.

“They want to get to know you before they say, ‘Hey, I want to work with you.’ And that’s where we want to get that part right,” Walker added.