Zillow took brokers by surprise this week, rolling out a first effort to get in line with the National Association of Realtors’ antitrust settlement.
The tech giant announced it is offering home touring agreements for buyer’s agents in the first step toward the new status quo under NAR rules slated to take effect this summer.
Under the settlement terms, the trade group will begin requiring its members to obtain written agreements with buyers spelling out their services and expected compensation before they can even show them a home.
Zillow’s new offering — which is non-exclusive and only spans seven days —- is the tech giant’s attempt to help agents satisfy the organization’s requirement in the early stages of working with a buyer.
It allows agents to bring buyers on tours of homes without officially onboarding them as clients and with no expectation that they’ll be paid for those services during its duration.
“The alternative to our touring agreement is an exclusive, long-term, binding agreement between buyer and agent before they’ve even had a chance to meet — which doesn’t foster a positive experience for either party,” a spokesperson for Zillow wrote in a statement.
Though the company is pitching the agreements as a win for consumers and agents, some brokers aren’t on board with the proposition.
“This can’t be what NAR meant,” said Jason Oppenheim, president of California-based Oppenheim Group. “They’re trying to create a loophole with a nonsense, unenforceable agreement that actually means nothing.”
Oppenheim, who’s also an attorney, noted the agreement isn’t a legally binding contract, since it doesn’t include consideration — meaning both parties agree to do or give up something.
“The idea of working for free, I don’t know where that happens anywhere else,” Oppenheim said. “Everything you’re doing is for free, and you have no exclusivity protections. That’s what they posit as the right solution to the marketplace, and they’re expecting these same people to be buying leads from them.”
Joining Oppenheim in his skepticism over the agreements’ viability is Virginia Realtors, which raised concerns about whether the agreement would comply with state laws, according to a post on the organization’s website.
“Before using any agreements which do not include any compensation, check with both your broker and your E&O insurance carrier,” the post said. “There are reports saying that some E&O policies will not provide coverage in any instances where there is no compensation paid.”
But Zillow claims the agreement is just the first step to developing an agent-client relationship, and it can be replaced with a more formal, exclusive buyer’s agent agreement at any time.
On the surface, Zillow’s touring agreement seems to comply with NAR’s own guidance for the new rule — which was clarified further by the organization’s chief legal officer, Katie Johnson, in an email sent Monday, just two days before Zillow announced the touring agreements.
Though the policy requires written agreements between buyers and agents working with them, it doesn’t dictate the time frame, nature of the relationship between buyer and agent, provided services or compensation.
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“It’s hard getting people to sign a commission agreement when they don’t know you from a hole in the wall,” said Compass’ Jason Haber, who’s launching a new trade group known as the American Real Estate Association.
The agreements are like “dating before marriage,” Haber said. Connecting with buyers as early in the process as possible is especially important in the industry’s new regulatory environment that threatens to diminish the role of buyer’s agents.
“As an industry, we want to avoid buyers going on Tik Tok and thinking they can master real estate acquisitions and then getting destroyed in the negotiation process,” he said.