08/09/2024
đđATTENTION POTENTIAL HOME BUYERSđđ
âźď¸ EFFECTIVE August 17th, all buyers currently looking to purchase any residential property MUST sign a "Buyer Representation Agreement"- prior to walking into a property.
đ° CANâT YOU JUST SHOW ME THE HOUSE âď¸
Starting August 17th, no REALTOR will be able to unlock a door without you first signing the agreement. This is non-negotiable as it is part of a legally binding settlement for all REALTORS.
đ° WaitâŚWHAT DO I HAVE TO SIGNâ
The agreement between you, as the Buyer, and your REALTOR is called the Buyer Representation Agreement. This document is the contract between you and that REALTOR, outlining the details of your relationship, roles and responsibilities, and the REALTOR's compensation. The compensation/commission outlined in this agreement is the MAXIMUM compensation your broker/agent can receive out of the transaction.
đ° SO, BUYERS NOW HAVE TO PAY COMMISSIONâ
Well, yesâŚbut actually, maybe noâŚ
The Buyer Representation Agreement clearly states that the Buyer is responsible for the commissions; however, there are various situations in which others, including the Seller or the Listing Broker, may pay the commissions. Reach out to me if you have any questions about your specific scenario.
đ° HOW DID WE GET HERE âď¸
Historically, the Seller paid the Listing Broker a commission, and the Listing Broker paid some of that to the Buyerâs Broker. Unfortunately, many people (Agents and Consumers alike) took that to mean âThe Seller pays the Buyerâs Agent,â which is not accurate. This misunderstanding caused a class-action lawsuit that resulted in a settlement that has become the driving force behind these changes.
In reality, the Listing Broker subcontracted the Buyerâs 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 boils down to the reality that Buyers' Agents are not guaranteed any compensation like they were before.
đ° WHAT IF I DONâT LIKE MY AGENT? CAN I GET OUT OF THIS AGREEMENT âď¸
The short and long answers are the same. Yes.
A couple of key things about the Buyer Representation Agreement:
1. There is language in the Buyer Representation Agreement that allows for a Buyer to cancel at any time.
2. The Buyer Representation Agreement can be for no longer than 3 months. It can be shorter, though, if that makes sense in your situation, and it can be extended if necessary.
3. The scope of the agreement can be as broad or as limited as you and your agent decide. Typically, I include properties within a defined boundary (generally counties), but it can be as limited as a single address or as wide as the whole state.
4. You can also limit it to specific price points or property types. For example, you could have one agreement for residential properties and another for raw land. These agreements can be with the same agent or two different agents.
đ° ALIGNMENT & COMMUNICATION đ
Now, more than ever, choosing a professional REALTOR is critical to successfully closing on your next property purchase.
August 17th is approaching, and a lot of changes are happening behind the scenes. 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 personally have been tracking these lawsuits for over a year. I have provided the J Castle Group team with extensive training and education on this settlement, including the small nuances and new requirements this settlement now requires.
If you have any questions about your situation, please donât hesitate to reach out!
