Information About Brokerage Services (IABS) - What it means
Updated: Feb 2, 2020
You've just met an agent they're already throwing papers at you to sign. This, my inaugural post will kick off a series of dry but important ones. In fact so important, that I'm composing this one before I ever take this site live.
The IABS Notice in 30 seconds
Your representation agreement is with a Licensed Real Estate Broker.
Your Licensed Real Estate Sales Agent represents you on behalf of that broker as a: listing agent, buyer agent, tenant agent or intermediary.
Without a representation agreement, a subagent's loyalty legally defaults to the seller in a real estate transaction.
Every licensed real estate professional is legally required to treat you with honesty and fairness.
You have 100% decision-making authority in your real estate transaction and should never feel pressured about any aspect.
For the drawn-out details, read on...
The rules about the IABS notice
A real estate sales agent must provide the completed IABS Notice at the first substantive communication.
If we talk shop about a property, your agent better provide the IABS.
You are not required to sign or initial the IABS
...but your agent and broker would really appreciate if you do. This notice was conscientiously composed with the intent of informing consumers how brokerage services work and what agency means. By initialing it, you are simply acknowledging that we did what is legally required of us.
The meaning of the IABS Notice
First, I'll note that I'm not a lawyer and do not propose to practice law or legal counsel in any form. The purpose of this article is to keep you informed right at the outset of your real estate journey.
Here goes, section by section in plain English...you can follow on my completed IABS in a separate window if you'd like.
TYPES OF REAL ESTATE LICENSE HOLDERS
A broker has training and experience above and beyond a sales agent, and is ultimately responsible for the agent's acts. An agent (that's me) is not allowed to access the MLS, let alone represent you, without the sponsorship of a broker. When you enter into a representation agreement, it is actually with the broker. So I'm acting on behalf of the broker, on behalf of you.
A BROKER'S MINIMUM DUTIES REQUIRED BY LAW
Honesty and fairness are the key words here. When you become a client, it's a whole new level. I consider myself a fiercely loyal guy to begin with; but the client-agent relationship legally enforces that your information is held in confidentiality for life and your best interests are placed above all else for the period of the agreement.
A LICENSE HOLDER CAN REPRESENT A PARTY IN A REAL ESTATE TRANSACTION
Most of next four "as sub/agent..." sections mention having agreements in writing. The two key organizations that provide governance and standard forms for real estate practice in Texas are:
Texas REALTORS® provides the forms for representation agreements. If you have a real estate transaction coming up, I strongly recommend that you familiarize yourself with them.
AS AGENT FOR OWNER (SELLER/LANDLORD)
The agent is commonly referred to as a listing agent. If you want to sell your property, we have the Residential Real Estate Listing Agreement, Exclusive Right to Sell. This gives us permission to list and market your property on your behalf. It also allows us to offer our expert opinions exclusively to you regarding the property and the transaction; but you make all the decisions.
If you want to lease your property, we use the Residential Real Estate Listing Agreement, Exclusive Right to Lease. The relationship and decision-making authority work the same as in a sale; but your listing agent will probably emphasize opinions more strongly for your own protection. You don't walk away from tenants at a closing table.
AS AGENT FOR BUYER/TENANT
We commonly call this a buyer agent or renter agent, and use the Residential Buyer/Tenant Representation Agreement to formalize the relationship. All previously discussed client privileges apply. More on this when I discuss "AS SUBAGENT" below.
AS AGENT FOR BOTH - INTERMEDIARY
Intermediary status means the broker represents both parties in the transaction. So the broker is privy to information that could help or hurt either party's position in a negotiation. The State of Texas and all ethical agents and brokers want to make it blatantly obvious that no one is getting an unfair advantage in such a situation. We are required by law formalize intermediary status using the Intermediary Relationship Notice.
Scroll down to Section 9 on page 5 of the Residential Real Estate Listing Agreement, Exclusive Right to Sell. This is where the seller makes the initial decision whether intermediary status will even be a possibility.
Now let's take a look at the scenarios and how they might play out. Have a conversation with your agent or speak with an attorney to determine what's best for you.
You are the seller and select No Intermediary Status
You are eliminating all agents sponsored by your broker from representing a buyer in the purchase of your house. This implies that you are reducing the pool of potential buyers, which reduces demand, which reduces price.
You are the prospective buyer interested in a No Intermediary Status listing
You like a property for which your broker represents the seller; and the seller checked box B. Even though you have a buyer representation agreement in place, it's probably for a geographic area. Since the listing agreement is for a specific property, it takes precedent. Your agent can show you the property and state the facts; but please don't take it personally if he or she is a little bit poker-faced.
Remember: your agent must place your interests above his or her own. When I run into this situation representing a buyer, and a no intermediary status listing is right for my clients, I refer them to competent agent outside of my office whom I know and trust.
You are the seller and select Intermediary Status
This has zero bearing on your listing unless a prospective buyer, who happens to be represented by your broker, is interested in your property.
You are the prospective buyer interested in an Intermediary Status listing
Your buyer agent will review and have you sign the Intermediary Relationship Notice. I'll cover this in more detail in a future post. Without the signature of both parties to the transaction, your broker would be practicing "dual agency", which is illegal in Texas.
Bottom line: if your agent has earned your trust and confidence, intermediary status should have little to no impact on your transaction one way or the other. That said, ask what safeguards are in place at the broker's office to quarantine information so that you don't risk losing negotiating power.
I think the IABS would flow better if this section followed "AS AGENT FOR BUYER/TENANT"; because it's really an inferior form of that relationship, as the name suggests. This is an agent's--and should be a buyer's--least favorite relationship. That's because "A subagent can assist the buyer but does not represent the buyer and must place the interests of the owner first." Your subagent must treat you with honesty and fairness; but their loyalty is legally due to the seller.
TO AVOID DISPUTES...
Putting things in writing helps to establish clear expectations and help keep things on track so you have the most pleasant experience possible. That said, you don't have to sign anything! We can legally move forward without a written agreement except in the case of intermediary status. Never feel pressured; but share any hesitations with your prospective agent. I personally won't enter into an agreement unless I've earned your trust and confidence.
LICENSE HOLDER CONTACT INFORMATION
Pretty straightforward :-) This section lists the entities and their roles in the agency relationship you are considering, and how to contact them.
That concludes what I hope will be my most tedious post ever. If you've read this far, I already know you're setting yourself up for a successful transaction.
Feel free to reach out or comment below with any questions.