Release Date: 10/05/2017
QUESTION: There was a discussion at my firm’s sales meeting last week about the practice of oral buyer agency. We try to avoid it but occasionally find it necessary with buyers who want representation but are reluctant to sign a buyer agency agreement right away. One of our agents said he thought he’d learned at the last Annual Update program that you have to have something in writing before you can show a buyer any of your firm’s listings. Is that correct?
ANSWER: Technically, no, but it’s a very good idea to confirm the existence and terms of an oral buyer agency agreement in writing, including the buyer’s permission for you to act as a dual agent.
Real Estate Commission Rule 58A.0104(a) provides that a broker may enter into an oral buyer agency agreement under certain circumstances. Among other things, the oral agreement must be “express.” According to Black’s Law Dictionary, “express” means “[d]eclared in terms; set forth in words…Made known distinctly and explicitly, and not left to inference.” As the Commission’s 2016-2017 Update materials point out, if you don’t discuss dual agency with a buyer with whom you are working on an oral basis and obtain his or her oral permission to act as a dual agent, then you can’t show him or her any of your firm’s listings since he or she hasn’t expressly given you permission to do so.
The Update materials confirm that you aren’t required by the Rule to get a buyer agency agreement reduced to writing until an offer is made, and that would include permission to act as a dual agent. However, the materials also state the following: “[i]t is wise to confirm the terms of this oral understanding in a written letter or email from the broker to the buyer/tenant.” We couldn’t agree more. Such a practice may help avoid misunderstandings with your buyer client, and from a risk management perspective, being able to produce a written document could really come in handy if a disaffected former buyer client alleges that they’ve suffered harm because, for example, they didn’t understand that you were acting as a dual agent in a transaction. Also, a written document could potentially help prove the existence of a buyer agency relationship in a commission dispute with a listing agent who made an MLS offer of compensation only to buyer agents.
A sample letter confirming the establishment and terms of an oral buyer agency relationship is available on the Legal Overview page of the NC REALTORS® website under Standard Forms/Non-Standard Forms/Model Letter for Confirmation of Oral Buyer Agency. Members may modify it to create their own version of such a letter or email.
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