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The Iowa Real Estate Transparency Act, which took effect on July 1, was designed to provide buyers and sellers with more transparency about realtor compensation costs in real estate transactions.
In the past, sellers would indicate the agreed-upon commission via their listing agreement, with the compensation split between the listing and buyer’s agents. Going forward, buyers must also sign an agreement known as the Buyers Agreement before viewing homes, which specifies how their agent will be compensated. While it is the responsibility of the realtor to obtain the proper documentation, there are currently no set forms required. Specific to Iowa, the Iowa Association of REALTORS (IAR) created and released their own version for use by their members. Lastly, though the Buyers Agreement is required to be executed, there is no required format for the documentation of the negotiated commission split between buyer and seller. This means any negotiated buyer’s commission could be documented in various ways, including but not limited to, being embedded within the purchase agreement or provided as an addendum.
In response to these changes, IBMC added an additional question on the MyIBMCHQ Alliance and Heritage Loan Registration, Lock, and Float screens. This update gives IBMC and partner banks the ability to disclose borrower-paid costs in good faith, using the best information available at the time of disclosure to provide an accurate picture of all costs associated with the loan.
Industry-Wide Implications
These updates are part of broader shifts within the real estate industry, following the Sitzer-Burnett v. National Association of REALTORS (NAR) case verdict last year. The proposed settlement agreement, which still requires final court approval, includes the removal of cooperative compensation from multiple listing service (MLS) listings and the introduction of mandatory buyer agreements. As noted above, the IAR released a Buyer Agreement form and is providing additional resources for its members.
As the real estate industry continues to evolve, IBMC remains committed to providing clear and accurate disclosures to customers, ensuring they have a comprehensive understanding of all costs involved in real estate transactions.
For additional information on the latest buyer agreement changes, read the IAR article.
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