For the last few months I’ve been talking about the HUGE CHANGES coming to the real estate industry. The final deadline for changes within the procedures for real estate companies is August 17th! Under the “current” procedures in most cases, the seller’s listing company is “sharing” their commission with the company whose agent brings a successful buyer. In other words, the seller pays a fixed percentage of the purchase price and then the listing company shares it with the buyer’s company.
Under the NEW rules, the buyer must enter into a “Buyer’s Agency Agreement” with their chosen company/agent BEFORE that agent can take them to see any homes, set up any automatic searches, etc. That agreement will clearly state how much percentage/money/fees the buyer will pay their company. We call it “listing the buyer” just like we do homes. The buyer’s commission can be paid in numerous ways. The buyer can pay it at closing, the seller can pay it or a portion of it out of net proceeds as a concession, the listing company can “share” a portion of the commission they are charging the seller, or a blend of thereof.
Some companies will choose to charge their normal commission and “share” a portion of it. Other companies will charge a deeply discounted percentage, thereby NOT sharing any of their commission and the buyer will have to negotiate within the purchase offer how much they need the seller to pay in concessions for that expense. In today’s world, many buyers ask for “closing cost concessions” from the seller. This buyer’s expense will be handled in much the same way. Buyers NOT having representation may find themselves negotiating a purchase offer, arranging inspections, filling out various forms, etc. themselves and may have to seek legal advice to get them through the process (at potentially a higher cost!)
IF you are planning on SELLING, ask the list agents you interview if they charge a fixed commission which will be “shared” in some fashion with the buyer’s
company, or are they going to deeply discount the commission and charge you just what your cost is? If your list company does not “share”, you should be prepared and aware that you WILL be asked, in most cases, to help the buyer via seller paid concessions for possibly some or all of the buyer’s commission expense, much like a buyer asking for closing cost concessions. As always, the net proceeds dictate how much money to accept in an offer. As a BUYER, know that you will be asked to enter into the Buyer’s Agency Compensation Agreement, a legal binding contract, before any agent can represent you or show you homes.
In the end, there will be greater transparency of who pays who and for what services and will allow both buyer and seller equal footing when negotiating a purchase offer. Representation for both sides is never “free”, never has been, but the costs for both parties will now be transparent and as always, negotiable.
Published in Louisville Neighbors 08/2024
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