New Indiana law requires home buyers to sign agreements with agents

JEFFERSONVILLE, Ind. (WDRB) -- A new Indiana law makes changes to the home buying process in the Hoosier state.

For many years, it's been standard for sellers to enter into formal listing agreements with real estate brokers. But now, prospective home buyers will also sign written agreements with brokers before purchasing a home.

Seth Brunzo put his Jeffersonville home on the market last week. The change will impact buyers interested in purchasing his home.

"I think our home is very homey," Brunzo said. "It's a large home but it's very comfortable."

The change was pushed along, in part, by a major settlement agreement between home sellers and the National Association of Realtors earlier this year. The goal is to increase transparency and protect consumers and brokers.

"Transparency is absolutely important," Brunzo said.

Indiana Gov. Eric Holcomb signed House Bill 1068 into law this spring and it took effect July 1.

"In order to see a property in the state of Indiana effective July first, you have to enter into what is called a Buyer's Exclusive Agency agreement," Bill Burns, broker and owner at RE/MAX First in southern Indiana said.

Buyers can still visit open houses without an agent representing them, but the Buyer’s Exclusive Agency agreements must be executed before a broker can begin negotiating on behalf of a buyer.

The Indiana Association of Realtors said professional representation is crucial for homebuyers navigating a complex and challenging market — and the new legislation solidifies the relationship between the buyer and the agent, spelling out the terms of the working relationship.

"This is a basic consumer-protection issue, and it protects the broker, too," Maggie McShane, IAR senior vice president of Government Affairs said in a news release. "Professional representation is crucial for homebuyers navigating a complex and challenging market and has value beyond a field into an MLS listing."

The legally-binding agreements also detail how the buyer's agent will be compensated. Historically, it has been common practice for the home seller to use the proceeds of a sale to pay commissions to both the listing agent and the buyers agent. Now, the buyer may be required to cover their agent's commission if the seller doesn't want to cover those costs.

"There may be some buyers that are going to be paying real estate commissions," Burns said. "Sellers are still welcome to pay real estate commissions and cooperate with brokers, so there's just a couple different scenarios and we don't really know exactly how that will play out until we see how the market is receptive to the changes."

Burns also stressed that in real estate — everything is negotiable.

"Always has been and always will be," he said. "Whatever commission you're paying is negotiable ... even the terms of the agreement. It can be for a single house, it can be for one month, three months, six months, a year. Everything's negotiable."

Burns said about 20 other states have already adopted Buyer's Exclusive Agency agreements and the proposed National Association of Realtors settlement ruling would spur the change nationwide on Aug. 17.

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