Earlier this week, Zillow launched a new “touring agreement,” a nonexclusive contract for buyers and agents to use for home tours. The real estate giant was prompted to do this by the terms of National Association of Realtors’ (NAR) commission lawsuit settlement agreement which requires agents to have a written agreement with a client in order to work with them as a buyer broker. This agreement must be signed prior to an agent taking a buyer to tour a home.
While many in the industry have been intrigued by Zillow’s new pilot program, Virginia Realtors is taking a tougher stand.
In a notice published on Friday, Virginia Realtors wrote that “upon analysis of this ‘touring agreement’ form, Virginia REALTORS does not believe it is in compliance with the requirements of Virginia law.”
The trade organization also advised members to discuss business practices and any agreements and forms they are going to use with their broker to ensure that they are in compliance with state law.
Additionally, the notice also stated that before members use any agreement which does not include any compensation, such as the Zillow touring agreement, they should check with their exclusions and omissions insurance carrier.
“There are reports saying that some E&O policies will not provide coverage in any instances where there is no compensation paid,” the notice stated.
According to Laura M. Murray, the general counsel at Virginia Realtors, Zillow’s touring agreement does not contain all of the provisions that are required by Virginia state law in buyer representation agreements. Two such provisions highlighted by Murray include that when a “buyer and broker enter into an agreement that is a non-agency relationship (like an independent contractor relationship), the agreement must specifically state that the real estate licensee is acting as an independent contractor and not as an agent,” and that all agreements between consumers and brokers “must contain the name and contact information of the supervising broker – the person who has a legal obligation to ensure compliance with the law.”
“While a non-agency, non-exclusive agreement is not a problem legally in Virginia, such an agreement must contain specific information to be in compliance with the law. The “touring agreement” we have seen does not contain all of the necessary information,” Murray wrote in an email.
For its part, Zillow noted that the touring agreement is part of a pilot program and as such, only available in certain metro areas, currently none of which are in Virginia.
“We are in the process of piloting the touring agreement in select markets where it aligns with local rules. As we do with all Zillow products, we work on a per-market basis as availability expands, and plan to make versions available for additional states,” a Zillow spokesperson wrote in an email.
Murray and Virginia Realtors noted that there are other states, including Maryland, whose state regulations would have similar conflicts with Zillow’s touring agreement.