A public hearing on Bill 329-37 seeking to establish clear guidelines for relationships between real estate brokers, salespeople, and clients, emphasizing the need for written agreements, was held on Thursday, Sept. 5. The bill has been introduced by Senators Telo T. Taitague, Joanne M. Brown, Tina Rose Muña-Barnes, and Joe S. San Agustin.
The bill would require all real estate transactions, whether buying, selling, leasing, or renting, to have a formal written agreement. This agreement must specify the commission terms, expiration date, cooperation with other brokers, and a cancellation clause, providing clarity for all parties involved.
Senator Telo Taitague explained that the bill stems from recent litigation involving the National Association of Realtors (NAR), which led to significant changes in how real estate transactions are conducted. "The NAR has agreed to certain transaction practices that are the basis for the provisions of Bill 329-37," she said. "This bill is intended to create a more transparent transaction for the benefit of consumers."
A key change outlined in the bill is that buyer’s agents will now need to enter into written agreements with their clients before showing properties. Additionally, buyers will be responsible for paying their own agents if the seller does not cover the cost.
Senator Sabina Perez highlighted testimony from the Department of Revenue and Taxation (DRT), which stated that written real estate agreements are the best way to clarify the relationship between brokers and clients. She also said that the bill would have no fiscal impact on the government of Guam, as confirmed by a fiscal note waiver.
Christopher K. Felix, president and principal broker of Century 21, expressed concern over the lack of consistency in current regulations. He noted that while Realtors must follow new rules requiring written agreements, other licensed real estate agents who are not Realtors are not bound by the same standards. "We’ve set up, unfortunately, an uneven playing field. One group does not have to do something another group has to do," Felix said. He emphasized the importance of leveling the playing field to avoid confusion in the market.
Neat Muña, president of the Guam Association of Realtors, echoed Felix’s sentiments, stating that the bill would ensure consistency across the industry. "We fully support Bill 329-37. Our endorsement is based on the fact that Realtors, as members of both GAR and NAR, are already required to follow these new rules," she said.
Sheri Fejeran, executive officer for the Guam Association of Realtors, highlighted the difference between realtors and non-realtor real estate agents. She explained that realtors are held to a higher standard through a specific code of ethics. "If we make this a mandatory written agreement that all real estate agents and realtors have to provide, it takes out the opportunity for a real estate agent to say, ‘I don’t have to follow NAR’s rules,’" Fejeran said.
Felix and Fejeran also discussed the ongoing litigation and settlement with NAR, which is expected to bring additional changes to real estate practices. Fejeran explained that the settlement prohibits agents from including their compensation on multiple listing services (MLS) and requires buyer’s agents to disclose their commission upfront.
Although the lawsuit has not yet been finalized, with a final court hearing scheduled for November, Muña said that more states are adopting similar legislation. "There are many other states that already have been doing buyer representation for years," she said.
Perez asked how the recent changes would impact housing prices in Guam. In response, Felix expressed uncertainty, saying, "Personally, all I can say (is), I'm not sure how it will affect (pricing). I don't see that much of an effect on pricing because appraisers are now going to look at that and appraise. Everything's probably going to balance out... but we don't know yet." He said that the adjustments had just started on August 17, and the industry is still adapting. “We just spent four months rewriting all of our forms... and we’re just poking our head above water right now and trying to breathe.”
Speaker Therese Terlaje raised concerns about the timing of the bill, suggesting that it might be better to wait for the final settlement. However, Felix argued that the bill should move forward now, as it promotes fairness and transparency in real estate transactions. "We think it’s a good thing, whether or not the settlement requires it," he said. "It’s good for buyers and sellers to negotiate with their agents and have in writing what they’re going to pay and what it’s going to cost them."
Taitague said, "We are in this predicament because of the bad apples out there," saying that the bill would help prevent misunderstandings about commissions and protect consumers. She said, “This is one way to ensure that.” mbj
For additional reading on the National Association of Realtors lawsuit and its impacts in Guam, click on the links below:
New rule, new realities: Real estate decision affects Guam buyers
Lawsuits could disrupt real estate commissions