August 23, 2023 Texas Real Estate Form Changes

**Understanding the Latest Changes to Texas Real Estate Contracts: August 2024 Updates**

Just when we thought we had a handle on the new real estate forms introduced in June, more changes have arrived! As of August 15th, Texas has rolled out new updates to real estate contracts, with these changes officially going into effect on August 23rd, 2024. In this blog post, we'll break down the key updates to the Residential Real Estate Listing Agreement and other related forms, helping you stay on top of these changes.

**Disclaimer**

The information provided in this blog is intended for educational purposes only and reflects my personal opinions. It does not constitute legal, financial, or real estate advice. Every real estate transaction is unique, and I strongly recommend consulting with your broker or a qualified professional before making any decisions or taking action based on the content provided here. Always follow your broker’s guidance and adhere to local laws and regulations.

**Key Changes to the Residential Real Estate Listing Agreement**

Here are the major updates to the exclusive right-to-sell agreement:

1. **Date Change**: The only change on page one is the update to reflect the new effective date of the contract, August 23, 2024.

2. **Broker Compensation (Paragraph 5)**:

- The language in Paragraph 5A now specifies that brokers must complete both parts 1 and 2 when filling out compensation details.

- In 5A1, the seller has the option to choose either a percentage or a flat fee, with additional clarifications added to the instructions.

- A new paragraph was added to explain that if the broker does not pay the buyer's broker as specified, the broker’s fee will be reduced by that amount, which directly impacts how compensation is managed between brokers.

- The changes in 5A2 clarify the process of splitting the compensation between listing and buyer brokers.

3. **Disclosure of Compensation**:

- A new provision allows the broker to publicly disclose compensation for the other broker, which was previously restricted in some cases.

- If there is no other broker involved, the listing broker retains the full fee, applying to situations like intermediary relationships or unrepresented buyers.

4. **Other Changes**:

- Language updates to enhance clarity on when and how compensation can be disclosed.

- The removal and relocation of certain sections to streamline the agreement, such as moving details about compensation disclosures to the relevant compensation section.

**Updates to the Compensation Agreement and Addendum Regarding Broker Fees**

- Changes to these documents primarily involve clarifications and additions to the language to ensure transparency in broker compensation and make it easier for all parties to understand how fees are allocated and disclosed.

**General Information and Notice to Buyers and Sellers**

This form has also seen updates, particularly regarding broker compensation language:

- New wording clarifies that broker compensation and the sharing of fees between brokers are negotiable and not set by law or any association. This emphasizes the independence and negotiable nature of broker fees.

**Buyer Representation Agreement Changes**

- The changes focus on specifying when bonuses or additional compensations are offered, ensuring that amounts are objectively ascertainable and clearly known at the time of agreement execution. New rules prevent vague terms like “TBD” from being used, which helps protect clients and maintains transparency in all compensation agreements.

**Conclusion**

While these changes might seem extensive, many are intended to clarify language and provide transparency in real estate transactions. Understanding these updates ensures that you, as a real estate professional, are fully equipped to navigate these contracts confidently. Keep these changes in mind as you move forward with your transactions, and always consult the latest redline documents or your broker for guidance.

If you have any questions about these changes or how they might impact your transactions, feel free to leave a comment below. Stay tuned for more updates, and see you next week!