Buyers now have to pay their agents commissions?!
Starting August 17, 2024, some major changes swept through the real estate world, and while you may have missed them, they will absolutely impact your next buying or selling experience.
Here’s a quick overview of what’s changed:
Compensation/Commission Decoupling: Buyers now pay their own agents, and sellers pay theirs.
Required Contracts: Realtors must have a contract with a buyer to show properties.
No More Shared Commissions: The previous system of sharing commissions between listing and buying brokers is gone.
Compensation Not Advertised: Buyers' agent compensation will no longer be allowed to be advertised through the MLS.
This week, let’s focus on what these changes mean for buyers (next week, I’ll dive into how sellers are affected).
What Does This Mean for Buyers?
Do I need a contract to look for a home?
Yes, if you want an agent to represent you, you’ll need a contract that outlines the terms of their compensation. These contracts can be:
Exclusive or non-exclusive
For a single home or a general search
Up to 90 days in duration
Negotiable in terms of compensation
Do I really have to pay my agent out of pocket at closing?
While you're responsible for your agent's compensation, this can be negotiated to be paid by another source, like the seller. A savvy agent will work with the seller to request concessions that cover your responsibility. Most sellers will likely still be open to providing the necessary funds, as refusing could reduce their buyer pool.
Do I need a contract to attend an open house?
No! However, many agents will ask you to complete an Open House Visitor Non-Agency Disclosure (OHNA), which states that they represent the seller and you are just a visitor.
Can I represent myself or call the listing agent directly?
Yes, but it may cost you more in the long run. Unrepresented buyers can be a challenge in transactions. The new listing agreement usually includes compensation terms for unrepresented buyers, which often results in more work and liability for the listing agent. If you’re comfortable being represented by the listing agent, you’ll need to sign a contract with them outlining compensation terms.
An agent is telling me I have to sign a contract with them in order to see a property - is that really true?!
Sort of. An agent needs a contract with you to show a property. If you want to be represented by them, then yes, a contract is required. If you already have an agreement with another agent, you should contact that agent to show you the property.
Remember, the contract can be for a single property, not necessarily for an extended time. But your best practice is to always call an agent you know and trust to show you something, rather than a random listing agent who was hired by the seller to sell their home for the highest price and best terms.
The Bottom Line
Be Selective! This new system is designed to benefit buyers who take the time to find an agent they trust. Real estate transactions are major decisions, and you deserve someone in your corner who is fully invested in your success.
In this season, your representation is more an important than ever: with interest rates, insurance concerns, rising prices, and low inventory, you need to be confident in who represents you. These new rules encourage you, as a consumer, to do your homework and choose wisely.
I know this is a lot to digest—feel free to call me if you have any questions or want to discuss what these changes mean for you!
