You’ve probably seen the news of the pending settlement proposed by the National Association of Realtors (NAR) regarding real estate commissions. We’ve noticed some confusion among our sellers and buyers and wanted to share with you what we know. The settlement will likely not be finalized until later this year, however; new contracts will be available in August, and at Golden Gate Sotheby’s we are ready for the shift.
Our data shows that in over 85% of transactions, Sellers are still offering Buyer agent commissions at or over 2.5%. The remaining 15% vary from 2.25% (on deals over $5M) to flat fees.
Here are the key changes that are expected to go into effect in November 2024, according to the NAR:
• Buyers and Sellers must have written agreements that specify the amount of broker commissions and who will pay them.
• Commission rates for Buyer brokers will no longer be published in the MLS.
WHAT SHOULD BUYERS EXPECT
• Expect to sign an exclusive broker engagement agreement before the agent will be able to work with you. The agreement will outline the agent’s responsibilities and compensation.
• Buyers may negotiate to shift the responsibility for paying the Buyer’s broker commission to the Seller if the Seller has not already agreed to do so.
WHAT SHOULD SELLERS EXPECT
• Expect to discuss the pros and cons of offering Buyer broker compensation with your listing agent.
• It’s still unclear how this change will shift market dynamics and the competitive landscape. The question of who pays Buyer broker commissions may become a point of differentiation in real estate marketing and negotiation.
WHY IS IT ADVANTAGEOUS TO WORK WITH A BUYER’S AGENT
Expert guidance: Making a substantial financial decision such as buying a home requires the support of a professional agent who knows the market, understands all the disclosure, reports, and inspections, and who has your best interests at heart. The seller’s agent is working for the seller and has a fiduciary duty to their seller.
Unlock Exclusive Off-Market Inventory: A connected buyer’s agent has access to homes that may never hit the market!
Accurate valuation: A Buyer’s agent will use their in-depth knowledge of the homes on the market to analyze comparable sales to help you make an informed decision.
Negotiation Skills: With expert negotiation skills, a Buyer’s agent can navigate contract terms to secure the most favorable outcome for you.
Support beyond closing: A buyer’s agent serves as your trusted guide through the transaction and beyond, providing ongoing advice and access to resources for future real estate endeavors.
WHY OFFERS OF COMPENSATION FOR BUYERS AGENTS ARE GOOD FOR SELLERS
• To keep your pool of buyers as large as possible. Not all buyers can afford to pay a buyer agent, especially with affordability already affected by higher interest rates and home insurance cost. By omitting any buyer agent commission, you might be reducing your pool of buyers.
• The Seller benefits from the Buyer having a competent agent because the sales and closing process goes much smoother. Delays disrupt the entire process and increase the carrying costs to the Seller.
• VA-loan Buyers are legally prohibited from paying a commission; the commission would need to be negotiated with the Seller.
One thing will never change, that is that the expertise and advocacy of a Buyer’s agent are indispensable assets in navigating the complexities of real estate transactions, ensuring that your interests are protected every step of the way.
Please reach out to us anytime with your questions, we are your trusted real estate advisors.
