03/18/2024
LONG POST, thanks for letting me rant...
I love helping First Time Homebuyers (FTB) purchase their first home. From directing them toward getting loan preapproval, talking up-front about affordability and their "must-haves," giving them all of the details about the purchase process, touring homes ALL OVER the place, working with Seller's attorney on 1031 Exchanges or Probate Sales, reviewing every line of the Purchase Agreement and every Disclosure before we submit or sign, explaining a supplemental property tax bill that will show up at the most inconvenient time...to ordering and attending inspections from people I trust and have worked with for many years, reviewing inspections with them to make them aware of every little thing, big or small, and answering the questions, "am I in escrow? What is Escrow?" There is a change that will now greatly affect ALL FTB's, whether our industry wants to admit it or not. The seller will no longer pay the Buyers Agent commission. If you're a seller, I can understand your "right on! What took this so long to happen???" BUT, if you're a buyer, and primarily a First Time Buyer, how will you compete? You likely borrowed money from family to help cover the downpayment and closing costs, but now you have to pay me too. Where will that extra 2.5% come from? My guess is that an FTB won't be able to afford to pay for a Buyer's Agent, so they'll be forced to go directly to the Listing Agent. You know, the agent representing the seller. That's right. If you can't afford to pay for your own Buyer Agent, you'll be working with the Agent representing the seller and their interests,. So a practice that is being spouted as "leveling the playing field" will NOT level the playing field at all. Let me tell you what this ruling will not do:
1. FTB's will NOT stand a chance in a competitive market, further marginalizing this group of Buyers who have to overcome big obstacles to even get in to the California Market.
2. Sellers will NOT discount their asking price because they're paying less commission.
3. Lenders are treating this as a closing cost and will NOT let the Seller pay the Buyers Agent commission, or let the buyer finance the commission as a cost of sale. You must prove to your lender that you have the funds to pay your agent if you choose to "hire" one.
4. The benefit of cooperating with MLS, (Zillow, Redfin, Realtor.com, etc) will NOT be transparent anymore. Listing Agents will no longer have to use MLS because they no longer have to disclose their compensation. Think more off-market and backroom deals for well-connected buyers.
5. Going directly to a Listing Agent when buying a home does NOT mean the Buyer is getting a better deal because the seller is not paying 5-6%.
So it is the end of an era for me. I will probably not have the privilege of representing FTB's as I always have. It is a niche that I loved, and sadly, it will be changing; and not for the better. I wish all FTB's the best of luck with navigating a home purchase. My parting advice for all Buyers; there will always be scum in this industry, and someone will exploit this new ruling to take advantage of you. Do your homework, and keep your eyes wide open.
