Breaking Down the Revised Agency Law
As you brush up on the latest real estate news, you’re likely to encounter some headlines about revisions to Washington state’s RCW 18.86, or the Agency Law, which covers brokerage service agreements, dual agency term changes, duties brokers owe, and more. It was signed into law on May 4, 2023, but went into effect on January 1, 2024, which is why you’ve probably seen mention of it recently. As the first state to enact this type of legislation, it will be interesting to see the effects of it on our local real estate market, particularly because this is the first time the law has been updated since it was enacted in 1997. In this blog, we’ll discuss some of the main points of the new additions and how they will affect buyers, sellers, and brokers.
The major change in the Agency Law is that all brokers must enter into a brokerage agreement, not just brokers representing sellers, as was the case previously. The agreement is essentially a contract between the client and the broker. The revision states that real estate firms must enter into a written brokerage services agreement with a buyer “as soon as reasonably practical.” This language is important to note because brokers will have to determine what “as soon as reasonably practical” means. In short, it means that an agreement should be signed no later than the first showing and prior to writing an offer.
Ultimately, this law aims to ensure that buyers are informed and in agreement with the service their broker will provide, eliminating any surprises or confusion down the line. Buyers will be aware of the costs associated with the broker’s services. This will bring up conversations about fees early in the broker-client relationship, but any quality agent will be able to explain and justify their fees, leading to what will hopefully be a productive and informative start to the professional relationship.
Another change is that what was once referred to as “dual agency” is now referred to as “limited dual agency.” Dual agency, or limited dual agency, is when a broker works on behalf of both the seller and buyer in a transaction. The difference in how this role is referred to in the law does not actively change much. However, buyers and sellers will now be required to sign off that they consent to a broker acting as a limited dual agent in the transaction. This increases transparency for all parties involved.
Although any new change, particularly one as serious as a law, will bring about necessary pivots and require new policies and procedures, the revisions to The Agency Law will ultimately ensure that brokers and clients are on the same page and feel comfortable with roles and expectations as they proceed. Buying or selling a home is no small matter, and it makes sense that there will be contracts in place to keep everyone informed and accountable. If you’d like to discuss the changes to the law and how this might affect you, whether you’re buying, selling, or just curious about starting your real estate journey, let’s get in touch.