Homebuyers: How Your Buyer Representative Now Gets Paid
By now you may have heard about the change shaking up residential real estate sales regarding how your buyer representative (agent) is paid. This may help with understanding the new requirements.
Prior to the recent NAR lawsuit and settlement:
The listing agent (on behalf of their Broker) and the seller negotiated with the listing agent a fee to list and sell their home.
The portion of that fee that would be shared with the agent who represented the buyer to a successful closing was disclosed to the seller in the listing contract.
Since the seller knew up front what they would net after cost of sale, they could price their property accordingly to obtain their desired/acceptable net proceeds at closing.
The buyer’s agent fee was then paid directly from the listing broker’s fee upon closing.
Current requirements:
The listing agent will negotiate only the fee for the listing brokerage. While the seller may choose to pay for the buyer’s representation if the offer is acceptable (knowing they may attract a much larger pool of buyers), the fee no longer flows through the listing broker but is paid by the seller through escrow in the form of a concession (credit) to the buyer.
If the buyer wants the seller to cover, or share in the buyer representative fee, the buyer must request and negotiate this concession up front in the Offer to Purchase.
If the buyer cannot cover the additional closing cost (cannot come up with additional cash to cover the down payment, closing costs and buyer representation) and seller will not agree, the buyer will either need to move on to another property, or go without representation. It is important to note that sellers have the option not to entertain offers from unrepresented buyers.
Please reach out with any questions. I’ll be happy to talk through various scenarios with you. Thank you!
Tamara
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