VREC Proposed Changes to Real Estate – A Call to Action
Sweeping Rules Changes Will Negatively Impact the Way We Do Business
FOR MORE INFORMATION:
Contact Peter Tucker, VAR Director of Advocacy & Public Policy
peter@vermontrealtors.com
Thank you to all the VAR Realtor® members who participated in the Vermont Real Estate Commission’s (VREC) July 1 hearing on the Chapter 57 sunset review of the practice of real estate and proposed rule changes developed by the Office of Professional Regulation (OPR). To all who participated, it was clear that the OPR is suggesting sweeping changes to the way we do business.
The proposals recommended in this report will eliminate Fiduciary representation of buyer and seller clients. It will eliminate Buyer Brokerage, Designated Agency and reduce our industry to transactional brokerage with no fiduciary responsibility to any party to the transaction.
26 VSA Chapter 57 provides that the State of Vermont regulation be imposed upon a profession or occupation “solely for the purpose of protecting the public.” Protection of the public is the only function that OPR is charged with, by statute. It is our opinion that the recommendations in this report will have the opposite effect.
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VAR encourages members to login to our online member-only community forum to learn more and to participate in member discussions.
In a public poll, 78% of those who recently completed a real estate transaction reported “a positive overall experience with their agent.” Under current rules, the public is protected and an overwhelming majority attest that they had a “positive experience” with their agent. It is our opinion that this report offers solutions to problems that do not exist.
The first hearing agenda went directly to the recommendation section of OPR’s report, with no consideration of the supporting documents and findings of the report. The findings are based on misguided assumptions and a faulty premise leading to a number of points that we disagree with in this section of the report. We will continue to challenge the background data and lack thereof, used to support the recommendations of the report.
This move would require that sellers pay their agent (no real change), and that buyers would be responsible to pay their buyer agent directly (significant change).
This recommendation will effectively eliminate buyer representation in the industry. By forcing buyers to pay their buyer agent most, if not all, buyers will opt to not retain buyer representation. This will force unrepresented buyers to deal directly with the sellers agent.
VAR is concerned that this move will eliminate protection of the public involved in a real estate transaction. Additionally, many buyers are prevented in their loan terms (VHFA, USDA, VA loans for example) from using the mortgage to cover buyer brokerage fees. Buyers who rely on these loans would be forced to pay brokerage fees out of pocket. More importantly, buyers would lose the consumer protections that currently safeguard their transaction process.
The majority of our members (approximately 90%) function under the model of Designated Agency. This model was developed to protect clients who have existing buyer agency relationships, even when looking at property listed by the agents office.
OPR’s proposed rules changes appear to question the integrity of designated agency firms, although they provide no proof of these firms taking advantage of consumers.
Designated agency has allowed buyer representation to be provided in a more efficient manner, while protecting consumers involved in real estate transactions. If OPR’s goal of oversight is to “protect the public,” we are convinced that designated agency needs to be maintained.
OPR believes that great choice is better for consumers, but they offer no data to support this conviction.
Facilitative Brokerage (also called Transactional Agency) can be best described as dual agency without the agency. According to OPR, “transactional agents face fewer conflicts of interest, have less related legal liability and more flexibility to negotiate sales.”
How does this model better protect the public?
OPR's report makes numerous other recommendations that VAR will review in the future. The recommendations listed above will have the largest impact on the practice of real estate. VAR will continue to advocate for rules that best serve our members and protect home buyers and sellers. YOUR FEEDBACK AND INVOLVEMENT is very important! VREC will hold additional meetings to discuss OPR's proposed rules changes. Meetings are held by Zoom, but will also be held in person. The next meeting will be held on July 22 from 9:30am-1pm and will discuss designated agency and facilitative brokerage. To register, visit the OPR Calendar and click on the July 22 event.