There has been a significant change in the world of Real Estate with the NAR settlement that took effect in August. News outlets have reported confusing, sometimes incorrect or misleading info, so I though I would take the opportunity to explain the basics.

NAR Settlement High-level recap: ‍

Home sellers are no longer required to pay the buyers broker. This is actually somewhat misleading, as sellers have NEVER been required to pay both agents. Traditionally speaking, the seller hires a brokerage for an agreed upon fee, and its their job to sell the house. Part of that is deciding what to share with the buyers broker. While never required, the standard was a 50/50 split with the cooperating broker. There have always been options for sellers who didn’t want to pay a 4-6% commission, including Redfin (still pay 3.5%), For Sale By Owner websites, or discount brokers (still pay 3-4% and do most of the work themselves).

In the new real estate environment the seller may choose to pay the cooperating broker, or they may choose not to. The cooperating commission is no longer allowed to be shown in the MLS, so any buyer working with an agent must contact the listing agent to find out of there is coop commission or not. Since the new rules just started a few months ago, not much has changed, most sellers are still paying the traditional fees, believing that will increase their chances of a quick sale.

While the traditional agreements are now gone, sellers may still negotiate unique terms with their brokers. For instance, they can agree to pay the listing broker (3% for example), and agree to pay the buyers broker a flat fee instead of a percentage of the sale price.

What now for buyers and buyer’s agents?‍

Brokers have always been encouraged to have all clients sign Buyer Representation Agreements, but they were not required. Brokerages around the country have now made them mandatory. At Berkshire Hathaway, I cannot show a home to anyone, friend, family or referral, without having a signed agreement that I am in-fact representing you. Within this agreement all brokers and their clients must agree on the fee structure of their relationship. It is unrealistic to expect a broker to work with a buyer, and then walk away with no compensation if the buyers pick a home without cooperative compensation. So the agreement features a section that says something to the effect of “If I buy a home that offers no cooperative compensation, I will pay my representation $X or X%.” The days of casually seeing homes with new clients are gone, for better or worse.

Why use a broker when buying? Is it worth the possible expense?‍

Having spent 15 years of my life selling homes, in booming and busting markets, I can say confidently that all buyers should have qualified representation. Here are just a few of the many reasons you should consider using a buyer’s broker, even if you end up having to pay them.

Expert Guidance and Market Knowledge‍

A buyer's agent brings valuable expertise and local market knowledge to the table. They can provide insights into current market trends, neighborhood dynamics, and property values. This information helps you make informed choices and can be crucial when deciding on offers or negotiating terms. A good listing agent will not offer up any information that may be a detriment to the sale, having an expert that understands construction, city ordinances, and property history will be in a better position to ask the right questions.

Skilled Negotiation‍

One of the primary roles of a buyer's agent is to negotiate on your behalf. They can advocate for your interests during the offer process, aiming to secure the best possible price and terms. Their experience in handling negotiations can help you navigate multiple offers or competitive bidding situations more effectively.

Support Through the Entire Process‍

From the initial search to closing, a buyer's agent provides support every step of the way. They can coordinate inspections, manage paperwork, and communicate with other parties involved, ensuring that deadlines are met and that you stay informed throughout the transaction.

Legal Protections‍

Adding in a buyer’s broker will also provide a layer of legal protections. If an unrepresented buyer is mislead, taken advantage of, or lied to, it can be tougher to prove. All agents purchase Errors and Omissions insurance, protecting themselves, and their clients from mistakes.

Objective Advice‍

There is no doubt that a certain level of knowledge comes from brokering hundreds of home sales. Could you buy a home without a broker? Sure, but then you’re at a higher risk of being taken advantage of. Buying a home can be an emotional process, and a buyer's agent offers objective advice to help you stay focused on your goals. They can provide perspective and guidance, ensuring that your decisions align with your long-term needs and budget.

Real estate has changed but the same complicated management of transactions exists. If you are interested in discussing the benefits of using a buyers broker, or have questions about selling a home in this new world, please call me and I can help walk you through it, my door is always open!

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