1% BUYERS SERVICE
Purchasing a home is a significant life event for most people, often the biggest purchase a family will ever make. A recent lawsuit against the National Association of Realtors (NAR) will impact how buyers purchase homes and the amount and method by which real estate agents charge commissions. The NAR settlement agreement includes changes to boost competition and transparency in real estate transactions.
Change is inevitable in any industry, and the real estate market is no exception. Recently, the National Association of Realtors (NAR) reached a significant settlement regarding the Sitzer antitrust lawsuits (pending the judge’s approval), introducing new requirements for, among other things, Buyer Representation Agreements. Let’s explore what this means for Buyers and agents and how to navigate these changes effectively.
Buyer Representation Agreements
Buyer Rep. agreements formalize the relationship between agents and buyers, outlining the terms of the agreement, including the scope of services provided by the agent, the obligations of both parties, and the compensation structure. These agreements allow clients to have a clearer understanding of their agent’s role and the costs associated with their services.
With changes anticipated to begin in mid-July 2024, agents representing buyers must enter into written agreements with their buyers prior to touring a home. These agreements must disclose terms comprehensively and conspicuously, empowering buyers with a clear understanding before committing.
It will be up to buyers to set their own agents' pay. Some buyer's agents might charge flat fees, or an hourly rate, or they might charge a fee for each time they accompany a buyer to a showing.
As a buyer, many people have gotten used to going to websites, clicking a button that says "tour now", and a Realtor shows up and shows you the house. This system only works because Realtors are guaranteed some form of payment if they sell the house. Now, before any agent can show you any house, you must sign an exclusive Buyer Broker Agreement stating exactly how much that agent will get paid if you buy the house. And if the Seller is unwilling to pay some or all of that commission, you as the Buyer, would be on the hook for the difference.
This is hopefully going to make Buyers think twice about the agent they work with, do their research on that agent, and interview multiple agents to see who is the best and provides the most value in relation to whatever fee that agent is charging. Now that brand new agent who got that lead and showed up to open the door and was in the right place at the right time may get less than an agent that was working with a buyer for 18 months trying to find the perfect home - as they should in my opinion.
