You’ve probably heard all the chatter on the news about how home sellers aren’t required to pay buyer’s agents commissions or any real estate commissions anymore. However, this has always been the case. For Sale By Owners (FSBOs) have been around forever. Homeowners could always sell their properties on their own without the representation of a real estate professional and there was never a rule or law stating what commission sellers had to pay or to whom.
What is different now is the Buyer Representation Agreement (Agreement). Starting July 1, 2024, and unless the rules and/or laws change, all prospective home buyers will be required to sign a Buyer Representation Agreement with their agent, no matter what brokerage they choose to work with to purchase real estate. This will take effect across the country.
- “What is a Buyer Representation Agreement?”
I can’t speak for all brokerages, but Coldwell Banker’s Agreement is a legal document detailing, among other things, the location of the home search, the amount of time the Agreement is in effect, and the commission agreed to by the buyer, buyer’s agent, and brokerage.
- “Do I have to sign a Buyer Representation Agreement if I’m buying new construction?”
Yes, all home buyers are required to sign an Agreement.
- “I’m getting a VA or FHA loan. Do I need a Buyer Representation Agreement?”
Yes. VA and FHA buyers need the Agreement, and the VA has waived their rules, for now, against allowing buyers to pay any out-of-pocket expenses.
- “Do I have to sign a Buyer Representation Agreement if I don’t have an agent and go directly to the listing agent for her/him to represent me?”
Yes, if you’re working with a real estate agent the Agreement is required.
- “I’m a home buyer. Do I have to pay my agent’s commission now?”
It depends on whether or not the seller is offering a commission to the buyer’s agent and how much. The Buyer Representation Agreement details the buyer’s agent’s compensation. If the seller is not offering the buyer’s agent commission the buyer will be responsible for paying it. If the seller is only offering a small amount, then the buyer would be responsible for paying the difference between what the seller is offering and what the buyer’s agent’s commission is.
- “Is this negotiable with the seller?”
Of course. Everything is negotiable and I work with home buyers and sellers to come to an equitable agreement for everyone.
- “I’m a homeowner and selling my property. I don’t want to pay a buyer’s agent commission. Can you list my house if I don’t agree to pay the buyer’s agent?”
Yes, I can list your house if you agree to only pay the listing agent commission. However, you are eliminating a large pool of buyers who are not able to afford to pay their closing costs and their agent’s commission. As of now, the commission is not able to be part of the loan, therefore it is an out-of-pocket cost. Traditionally, the commissions were built into the purchase price of the property. That’s one reason For Sale By Owner (FSBO) homes usually sell for less than professionally listed homes.
According to the National Association of Realtors, “FSBOs typically sell for less than the selling price of other homes; FSBO homes sold at a median of $310,000 last year, significantly lower than the median of agent-assisted homes at $405,000.”
The best way to make sense of all of the new real estate rules coming our way this summer is to schedule a consultation with me. I am here to help you navigate the complexities of the real estate transaction whether you’re a homeowner wanting to sell, or a first-time buyer, or a veteran buying or selling your 15th home. I’m here to help and happy to sit down with you to answer all your questions. Call or text me anytime! 813-205-1214.
