News > What's New With Real Estate Commissions?

published on 2024-06-28

There are a few big changes for how you'll work with a buyer's agent on the horizon. Starting in August, 2024, the National Association of Realtors (NAR), because of a settlement from some class action lawsuits, has mandated that no offer of buyer agent commissions by the seller can be stated on the MLS. Though the seller was never required to pay buyer agent commissions in the past, others saw this standard as anti-competitive. The other change has to do with how you'll be starting a relationship with your buyer's agent.

What does this Mean for Buyers?

Buyers will see 2 changes in August. First, in order to see any property with a buyer's agent, you will need to sign a representation agreement with that agent. The representation agreement will spell out the term of the agreement, how your agent will represent you and how much your agent will get paid. In most cases, the agreement would state that your real estate agent would get paid upon closing of the property that your agent helps you buy.

Second, the buyer agent commission the seller is offering to pay will not be included in the MLS. Starting in August, the buyer agent commission can be specified in the purchase contract along with which party will pay that commission.

All Realtors in Arizona will have to follow these rules.

How Will My Buyer's Agent Get Paid?

There are 3 ways your buyer's agent can get paid:

• The seller pays. If you have bought property in the past, this is the traditional way a buyer's agent gets paid. The seller pays the commission directly out of their proceeds.
• The seller offers a closing cost concession. A portion, or all of that amount can be used to pay your buyer's agent. Although this option seems very much like the previous option, lenders often do have closing cost limitations, so this option will need to be discussed with your mortgage lender representative.
• The seller does not contribute towards your agent's commission. In this case, the commission would be added to your closing costs for the property.

These changes now add a step to negotiating an offer on a property. That's where your buyer's agent comes in. Your buyer's agent will negotiate one of the three options above depending upon your wishes, and if the seller does not want to pay your agent's commission, then your agent can attempt to negotiate the price of the property down to cover that commission, or you can choose to move on to another property where you can get a better deal.

The value of having a buyer's agent has been shown time after time with our buyer clients. There is a set of 20-30 items a buyer's agent must do to protect you and enable a smooth path just in the escrow process alone. You don't know what you don't know when you search for property, and that's when access to a knowledgeable real estate professional to guide you in finding the best condo, townhome or single family residence, negotiating the best price and making the escrow process as smooth and convenient as possible, you can also feel comfortable in knowing you have someone looking out for your best interests, rather than being subjected to the competing interests of the seller and the seller's agent.

We'd be happy to answer have any questions about this process. Just Contact us and we can arrange for a phone consultation of in-person meeting.

 

Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

Related Links

• Scottsdale Condo Buyers Guide