Anyone looking for a home to purchase in Iowa is being introduced to some new legislation known as the Iowa Transparency Act. This Act was introduced during the 2024 Iowa legislative session where it had significant bipartisan support and became law on July 1, 2024. It requires that licensed real estate agents and prospective clients each sign a buyer agreement prior to showing any property, and if no showing occurs, prior to an offer being made on the property.
So, what is a buyer agreement? Part of the Act clarifies the point in which the client relationship begins and both sellers and buyers need a written contract to engage with a licensed real estate agent. The Act states that the client relationship begins at the signing of a brokerage agreement, which is either a listing agreement or a buyer agreement. These listing or buyer agreements must also establish the broker’s compensation for their services and clearly state that compensation is negotiable and not set by law.
As a buyer’s agent, before I can show any properties to you, I need to provide a buyer agreement, listing me as the agent and you as the client. It will provide the term of the agreement, indicating the day it begins and ends. The minimum requirements of my service and my obligations, as well as your obligations, are clearly defined in the agreement along with information about severability, indemnification, remedies of the parties, and fair housing.
The broker’s compensation is also defined in the agreement and this is probably new for most buyers. Traditionally, in Central Iowa anyway, the seller has paid broker compensation to the buyer’s broker and the buyer may not have given much thought to how much that is. The Iowa Transparency Act has given the buyer authority over how much their broker can be compensated. If the seller has offered to compensate the buyer’s broker more than the buyer’s agreed amount, the compensation will be limited to what the agreed amount in the buyer agreement is. If the seller is offering less compensation than the buyer has agreed to, the buyer will need to compensate their broker the difference.
The terms of these agreements can be modified at anytime with a written amendment clearly stating the change and signatures of all parties. They can also be cancelled with a written cancellation and signed by all parties.
My own experience since these new requirements have taken effect has been no problem overall. Some clients have asked some great questions which has led to healthy discussions. I believe the new rules are a good thing for the real estate industry in Iowa and I look forward to the future. There are some more changes expected to take effect nationally on August 17, 2024. I will discuss those in a future blog when all the details are finalized, but what the Iowa legislature did on July 1st has made this state proactively compliant with the proposed changes so we are ahead of the changes.
If you have questions about these changes, please don’t hesitate to reach out to me and I will be happy to answer any questions.
Norwalk IA Real Estate –
Jon Niemeyer, Broker/Owner/REALTOR® at EXIT Realty North Star. I list and sell real estate in Central Iowa including Norwalk, Des Moines, West Des Moines, Cumming, Indianola, Carlisle, Waukee, Urbandale, Grimes, Clive, Johnston, Ankeny, Altoona, and Pleasant Hill in the Counties of Warren, Polk, Dallas, and Madison. Call
Jon Niemeyer at
515-490-4675.