Irvine’s Strongest Cash Offers. Want sell fast and hassle-free? Get multiple potential cash offers for your home. Get a Cash Offer Now
Are you still confused about the recent changes in real estate commissions? The class action lawsuit against NAR has led to new laws nationwide regarding how the buyer’s agents are compensated and the transparency surrounding that process. Moving forward, these changes should be considered when buying or selling real estate.
Contracts have always been a big part of real estate transactions. The first contract is between the seller and the listing agent. They agree on how much sellers need to pay an agent to sell their house, how long it will take, and their expectations regarding lock boxes, open houses, and listing syndication. This contract has not changed and will still be in effect.
The second contract is between the buyer and the buyer’s broker—the Buyer Representation Agreement. The NAR now requires buyers to sign this agreement with their buyer’s agent before viewing a home. Most of these changes come from the new lawsuit, which took effect on August 17.
Before, sellers would pre-negotiate the commission for both their listing agent and the buyer’s agent, and are published in the MLS. Now, when you sell your house, you’ll only negotiate upfront how much you’ll pay your listing agent. There’s no need to discuss how much you’ll pay the buyer’s agent to bring you a buyer.
The new law shifts this responsibility to the buyer. This change is based on the principle that the buyer’s agent works for the buyer and should be responsible for paying them. Buyers will need to directly contact and compensate their agent, in addition to the down payment and closing costs.
When making an offer, buyers must specify their agent’s desired compensation. The seller can then accept, reject, or counter this offer, opening up a new layer of negotiation in the real estate process.
This also aims to promote transparency in the buying process. But while this is a good reason to change the law, how will it affect sellers and buyers?
Sellers now have greater control over how much they pay the buyer’s agent, allowing them to potentially reduce their overall selling costs. It also opens up more opportunities to negotiate the sale price and the buyer’s agent commission.
Buyers, on the other hand, will need to budget for their agent’s commission, which will add to the upfront costs of buying a home. Nevertheless, they will better understand how much they’re paying their agent and what services they will receive.
Even with these changes, buyer’s agents remain crucial during real estate transactions. Their local knowledge, negotiation skills, and expertise in handling paperwork and due diligence are invaluable.
If you’re wondering how much you should pay a buyer’s agent, it all depends on the market condition. The percentage of commission paid to buyer’s agents is likely to fluctuate. For example, in a hot seller’s market, buyers may need to offer higher commissions to attract agents. While in a buyer’s market, sellers may have more leverage to negotiate lower commissions.
These changes significantly change the real estate landscape. While it may seem complex at the moment, it also promotes transparency, giving buyers and sellers more control over the transaction process.
If you’re considering buying or selling a home, you should understand these changes and how they might affect you. Reach out to us for professional guidance. You can call me at (949) 216-8565 or email me at danae@danaeaballi.com. Let’s navigate this changing landscape together.
