As many have seen in the news, as of August 17, 2024, all Realtors® are now required to have you sign a Buyer’s Representation Agreement prior to showing you any residential property. This is a mandatory, nationwide change for all Realtors® with no exceptions, due to the recent settlement with the DOJ and NAR.
What does this mean for you?
Before we can view any homes together, we need to have this Agreement signed and in place—regardless of how long we've known each other or the nature of our relationship. The agreement will reflect the terms we’ve agreed upon, including the services I will provide, the time period, and my compensation structure.
How did we get here?
Historically, a Home Seller may have compensated the Listing Broker for selling the house, and the Listing Broker offered some of that compensation to the Buyer’s Broker. Unfortunately, many people (Agents and Consumers alike) took that to mean “The Seller pays the Buyer’s Agent directly,” which is not accurate. This misunderstanding caused a class-action lawsuit that resulted in a settlement, which has become the driving force behind these changes.
In reality, the Listing Broker offered this compensation to the Buyer’s Broker to bring them a willing and able Buyer in exchange for some form of compensation, which was listed on the MLS. With the new NAR settlement going into effect, Agents/Brokers are unable to advertise ANY compensation offered to Buyers' agents/Brokers via the MLS. This ultimately means that Buyers' Agents are not guaranteed any compensation like they were before.
What is the Buyer’s Representation Agreement?
This Agreement is a written contract that clearly defines the terms of our working relationship, including my services, legal obligations, and structure of compensation. This agreement helps you understand my role and associated costs, while ensuring I am representing your best interests throughout the homebuying process.
Does this mean the Buyer pays for compensation?
Possibly yes, possibly no—the Buyer Representation Agreement clearly states the Buyer is responsible for paying the compensation; however, there are various scenarios in which others, including the Seller or Listing Agent, may pay the Buyer Agent compensation, which remains fully negotiable, just like all other terms.
Can the Buyer finance this compensation?
Current regulations do not allow the Buyer Agent compensation to be financed as part of a mortgage. However, this compensation may be in the form of seller concessions, the seller paying closing costs, or other potential solutions during purchase offer negotiations. It will vary based on each unique situation.
Do I have to sign this Buyer’s Agreement?
Yes, this Agreement is part of a legal, mandatory change for all Realtors®. But some key points—there is language in the Agreement that allows for a Buyer to cancel at any time, and the Agreement can be for no longer than 3 months. It can also be a shorter time period, or can be extended longer, depending on your situation.
What is the Scope of the Buyer’s Agreement?
The scope of the Agreement can be as broad or as limited as we decide together. We can include properties within a defined boundary, but it can be as limited as a single address, or even specific price points or property types. For example, we may have one agreement for residential properties and another for raw land.
What about meeting Consultations or Open Houses?
Buyers do not need to sign any Agreements to attend an Open House, or to meet with me for a real estate review or discuss your goals and plans for this year and beyond.
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Now, more than ever, choosing a professional REALTOR is critical to successfully closing on your next property purchase. This new rule with a Buyer Representation Agreement is just one facet of the NAR settlement, which is rapidly changing the real estate industry nationwide. Be sure to talk to any potential agent about their knowledge of the new rules and process. I am always available to advise & assist with your home buying and selling needs, and I appreciate your business, referrals, and support!
If you have any questions about this or other real estate topics, please don’t hesitate to reach out!
