As part of ongoing efforts to promote transparency and consumer understanding in Texas real estate, there are proposed changes to the Information About Brokerage Services (IABS) form—an essential disclosure document required by the Texas Real Estate Commission (TREC). These updates are particularly significant in light of recent legal developments affecting how brokers and agents communicate about commission structures.
Below, we break down what these proposed changes mean, why they matter, and how they’ll impact consumers and real estate professionals moving forward.
What Is the IABS Form?
The Information About Brokerage Services form is a mandatory disclosure that Texas real estate agents must provide to buyers and sellers at the beginning of any substantive discussion about real estate transactions. This document is designed to clarify the roles and responsibilities of agents and brokers, outlining whether they are representing the buyer, the seller, or acting as an intermediary.
Why Are Changes Being Proposed?
The proposed updates to the IABS form are a direct response to recent legal actions involving the real estate industry. Specifically, national lawsuits alleged that Realtors® engaged in price-fixing practices related to buyer representation fees. Though these matters have been settled, they sparked a renewed focus on commission transparency.
As a result, regulators and industry leaders are emphasizing that real estate commissions are not set by law, and that they are fully negotiable between the parties involved. These proposed changes aim to reinforce that message by incorporating clear language about commission negotiability directly into the IABS form.
What Will the New Disclosure Include?
Once adopted, the revised IABS form will include a specific disclosure that commissions charged by real estate brokers are not fixed by law and can be negotiated. This addition is intended to eliminate any misconceptions among consumers that commission rates are standardized or non-negotiable.
By formalizing this disclosure, brokers will help ensure consumers are better informed about their options and empowered to make decisions that best suit their needs.
What This Means for Texas Consumers and Agents
These changes are a positive development for both buyers and sellers, reinforcing the fact that they have a voice in deciding what fees they pay for real estate services. For brokers and agents, this update underscores the importance of having open, honest conversations about commission structures early in the transaction process.