I wanted to put some content to educate everyone on the changes that are coming beginning August 17th, 2024 regarding the way homebuyers engage with realtors when they're starting their home search. If you're more of a visual learner, here is a video of the same content.
In the old days(pre August 17th, 2024), you could call any realtor that you found on Google or Zillow and tell them you wanted to tour a house you found online and most of them would drop whatever they were doing and run over to show you the house. They were supposed to at least get you to sign a form called a "Working With A Real Estate Broker" disclosure form, but I'm betting most don't even sign that. Pretty simple process, right? The reason it's been so easy and painless is because, until now, realtors have known that their commission has already been negotiated on their behalf and they will earn a commission if you decide to purchase.
Starting August 17th, a realtor will no longer be able to show you any home until you have signed an exclusive buyer's agency agreement. If this sounds heavy and serious, it's because it might be. It's a contract agreement between you and your agent laying out the framework for how your realtor will be paid should you choose to buy a home. When you sell your home with a real estate agent, you sign a listing agreement which lays out the commission to be paid, the length of the agreement, and the price of the home. The new buyer's agent agreement will define the amount of the commission to be paid, the length of time for the relationship, and the price range of the home you're looking for. This agreement could last for several months or as short as just for one property. Prior to August 17th, the MLS required any agent listing your home on it's service to offer compensation to a buyer's agent. It could be as low as $1, but they were required to offer money to a buyer's agent. That is going away. The MLS can no longer require that you offer money to list the property. Furthermore, other agents won't be able to see how much, if any commission is being offered to the buyer's agent. This means we'll essentially be working blind and not have any guarantee that we'll be paid for our work.
In a typical real estate transaction, there are 2 agents involved. The listing agent, who works for the person selling the home and a buyer's agent, who represents the person buying the home. Beginning August 17th, a move toward separating, or "decoupling" those 2 agents is coming. This means the seller can choose whether or not they even want to offer money to be paid towards a buyer's agent. They can choose to offer as little as they want, down to $0. The commission has always been negotiable, but it's been understood that some money, or a percentage was to be paid to the buyer's agent.
I'm going to say this upfront: I still believe the "old way" of offering commission to the buyer's agent is the best way to sell your home quickly and for the most money. The new way is going to require more rounds of back and forth and negotiation for all parties involved. Now, you might agree on a purchase price and closing cost but not have an agreement on what the buyer's agent will be paid or who will pay the buyer's agent. This could throw yet another wrench into the homebuying process.
As your buyer's agent, it is absolutlely my intention to fight for you as the buyer to have the seller pay my commission as has happened in the past, but it needs to be communicated on the front end that there's a possibility the seller won't budge and that cost could fall to you.
This will likely have the biggest impact on first time homebuyers who do well just to save up the down payment for the home. There are still other costs involved such as inspections and closing costs that are in addition to the down payment. I don't have to tell you that purchasing a home is expensive! Now, with "decoupling", there is a chance the seller of your dream home may not be offering any money to pay your realtor and that could mean you end up having to pay your own agent.
It's my opinion that this might seam like a good deal for the sellers on the front end, but it could put even more financial pressure on potential buyers as they face the possibility of paying for their representation in addition to all other costs associated with buying a home. This might mean that homes sit on the market longer and that negotiations drag out longer than they have in the past.
It's just been a natural extension that the home seller tends to have the biggest financial advantage as they gain access to their home equity at the sale of their home. This is why they have typically offered to make concessions and pay for the buyer's representation.
Buying a home is always an exciting process. Buyer's agents have probably gotten lazy as they haven't had to to really sell themselves due to the prenegotiated commissions they used to getting. Look for a push from buyer's agents to show their value and talk more about the services they provide in the transaction. Education and communication is key!
Call or text me today if you're considering a move so I can further explain the new process, talk to you about the new forms, and outline a plan to make you the best candidate during your homebuying process.
