Why Home Bay Related Brokers Don't Sign Disclosures or the Residential Purchase Agreement

By Home Bay

When Home Bay affiliated brokers sign listing agreements, the listing agreements state the listings are "limited service." Limited service is a term of art that came out of the Justice Department anti-trust settlement with the real estate industry several years ago. The designation means the broker does some, but not all, of what a full service broker would do.

When the broker inputs its listings into the MLS, it designates that the listings are limited service. Thus, both the MLS data sheets and the listing agreement itself put parties on notice that the listing is not a full service listing.

The reason limited service brokers typically do not sign the disclosures is because, unlike full service brokers, they do not physically visit the home or inspect it. The reason limited service brokers do not sign the California residenital purchase agreement or other state equivalent is because they are not a party to it.

If there is a buyer broker in the transaction, that buyer broker is paid its commission directly by the seller through seller's escrow proceeds at closing, per commission instructions signed by the seller. In other words, it is not the listing broker paying the commission to the buyer broker.

In addition to limited service and full service, the Justice Department and MLS boards recognize a third designation called “entry only.” Entry only means the listing broker only entered the listing into the MLS and did nothing more. Entry only brokers also would not sign disclosures or the purchase agreement.

Effectively, in today's world, there is no longer a black and white distinction between a FSBO listing and an agent listing. Between those two extremes, there are the categories of limited services and entry only, both of which the seller is selling without in agent in some respects, but not in others.

Read more in: Completing Disclosures

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