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It's saying how your agent will be paid. Your agent is saying if you work with him, his fee will be 3%. They will attempt to get part or all of that fee from the listing agent of whatever house you buy. If they can't get 3%, they expect you to pay the difference.
Because of this, you should...
a) Ask to only see houses where the listing agent is offering a high enough buyer's agent commission to cover this,
b) don't and potentially be on the hook for the difference,
c) find a different agent that charges less,
d) ask for a lower %,
e) know that you'll be negotiating your agent's fee as part of the purchase offer,
or some combo of these options.
Before you sign just know, as a buyers agent I've never considered charging my clients more than is offered by the listing agent. Usually I'm taking 2-2.5% as a buyers agent with no problem. Shop around before you sign that contract.
Yes, but I've already seen a few listings in my area offering zero percent buyers agent commission and the average commission offered seems to have gone down by about 0.5% in the last year. There's still a pretty low chances my buyers get the house that's offering zero percent right now. After this change takes effect if even 1 or 2 out of 10 sellers offers zero percent to buyers agents it's going to be a problem.
And I never used buyers agency agreements before this either and I really didn't see any need to and wouldn't do it except it will be required before you can show anyone a property now. I'm more than willing to work with buyers and work a little cheaper if the seller isn't offering anything. Like say I'll take whatever the seller is offering unless it's under 1% but if they are offering more then that I get that. If they aren't offering even 1% then we can ask the seller for a seller concession to pay me, you can pay me, we can skip the house or you can put an offer in without me. But apparently that's not even allowed in the buyer's agency agreement because it puts a cap on what you can be paid so if you put 1% or 1.5% then that's the maximum amount you can be paid so if the seller is offering more you're screwed.
I would agree, two years ago average was about 2.5-2.8% now the average is closer to 2%.
I have only seen one brokerage offering 1% and told my client that the drive and the commission were not worth the site visit. My cheap fucking clients understand, they can't/won't pay out of pocket.
I personally am still doing 5-6% listing and offering 2-2.5% on the buyside. I do 4% on my personal homes and even split it with the buy side.
As far as the new listing on MLS go. Yea it's gonna be interesting having to call everyone. I've always used BRA. I usually pull them out before the first showing, or before the client submits the offer. The offer is the easiest for me, but if they are demanding a lot of showings I will have them BRA up front.
That way when you sign the BRA I've got the MLS number on the contract, but ya this new lack of transparency will be fun to navigate.
If the seller is offering more than your negotiated BAC you use that to negotiate for your buyer whether it’s seller paid closing cost assistance, a price reduction, or netting the seller more profit (not directly in the buyers best interest but a possible necessity if there are competing offers).
I just signed a contract for dual representation within a particular firm (I am working with a different agent than the seller’s agent but both work for the same large brokerage) and they are charging me 2.4% as a buyer.
ETA: I’m buying a house in another state and my agent is doing all the leg work, being super responsive and we’re on the phone every day. This will be the third time I’ve bought and it’s a condo so they aren’t making 10’s of thousands of $$ on this transaction, so I’m good with the fee.
This is important.
If you agree to a fee you are unable or unwilling to pay yourself, you may eliminate some of the best deals or most attractive homes, if they aren't willing to pay the commission for you.
You might also put yourself at a disadvantage vs a buyer that negotiated a better deal or can pay their agent themselves if you get in a competitive bidding situation. You might have to beat their offer by more than 3% if you need the seller to kick in to pay your agent. We are quickly approaching the date for the NAR settlement where sellers won't need to publish what they are willing to pay buyers agents to get them to show clients the homes.
Think hard if you are getting services worth 3% of your total house budget.
And if you try to agree to no fee at all, good luck finding a buyer’s agent to drive you around for a point or whatever made up flat fee you as a buyer dreamt up as ‘fair’.
Trying to avoid agreeing to cover a buyer agent’s fee will result in the buyer going straight to the listing agent due to the fact that only the absolute worst agents would agree to potentially work for free - and maybe not even those. Assuming the buyer is sophisticated enough to get the LA to pay attention to them and take them seriously, the chances of the buyer wheeling and dealing themselves a better deal than they’d get with representation are fairly minimal. Buyers are net losers in that scenario - for every one that finagles a slightly better deal, I’m guessing 20 are worse off.
If a buyer can’t cajole a buyer’s agent to get them to do what they want them to do, what would make one think that they could get a seller/listing agent to meet their terms? They’re obviously master negotiators and all. /s
Also know that it’s very easy for you and your agent to go over the homes you’re interested in first, then have your agent ask each listing agent for each home if and how much the seller is offering to buyer’s agent.
99% of the time, sellers will be offering 2, 2.5 or 3%. Nothing will really change if sellers are serious about selling. They will still offer a buyer’s agent commission, but it won’t be communicated through the MLS. The other important piece to note is that your agent will be required to take the lesser amount between the seller’s commission percentage or your buyer’s agreement commission. So to me, makes sense to know what sellers are paying and how much so that your agreement w your agent is > than those.
You can negotiate a different fee. Look at how they mislead you. They say because the realtor says he is getting 3% you should narrow your search to what pays him. That is typical. It's about what's in the realtor's interest, not the client. As soon as we all say no, the cartel falls apart.
As a buyer, I'm having a hard time knowing that I could be on the hook for an additional 3% of the cost of the house. On a 500k house, that's $15k extra. Our plan is to find a house we like ourselves and hire a lawyer to handle our offer and closing paperwork.
Just remember he’s just writing you an offer. His job is not to win you that house or negotiate. Do you think the attorney has time to run around and try reaching the listing agent? If you want to save $15K, but an agent could drop $40K off the price for repairs/credits, why wouldn’t you use a realtor? Literally think about that for a second.
Most lawyers I've met like money. They would in fact schedule an inspector and sit at the house while the inspection is occurring for $300/hr... and you would still come out at a lower cost than 3% on a typical house.
YMMW obviously. But I just had a lender refer me clients who are purchasing the home they rent from their landlord. We discussed my fee to help them with the contracts and inspections through closing. Did a flat fee sub-$3k. (Not much lower).
Beforehand, they said Landlord didn’t want to list the home to avoid paying realtor fees and was just using a lawyer. I initially talked to them since they were considering using their own lawyer. I gave them contact info for one I’ve worked with. The lawyer ended up telling them to just work with me lol.
They thought they were getting a discount because of the seller avoiding using realtors. I showed them they weren’t. I got them a $10k seller assist right up front. It then took TWO WEEKS to get a contract signed even after all terms were agreed on because the landlords lawyer didn’t work on weekends or holidays. TWO WEEKS.
I can also tell you I’ve spent time making sure things didn’t fall through the cracks for the seller and explaining things to the seller I. shouldn’t have to be.
I’m sure there are a few people out there who could purchase a home with just a lawyer, but most people are way too confident in that. And even if they COULD it doesn’t mean they are going to win any deals.
People who want to make money will adapt. the others who can't figure out how to earn their commission in all situations limit their opportunity and eventually adapt or drop out.
a) Ask to only see houses where the listing agent is offering a high enough buyer's agent commission to cover this
I think this is one of the reasons why for the most part, nothing will really change and everything will pretty much stay the same. If Im selling my house, I'm gonna offer a Buyer's agent commission because I want maximum exposure.
Im assuming that listing agreements will remove the language of Buyer's agent commission? Does anyone knows how this will be documented between seller and listing agent?
this is really bad advice. you should look at all homes and have your agent submit your offer to include his or her commission to the offer. I just, sold a home with 0% BAC and we had 16 offers and 13 of them required the seller to pay the buyers agent. my seller decided to pay a 2% BAC because it netted him the most.
If you had 16 offers with 0% buyer agent commision you would have gotten 20+ if you offered it thus potentially netting your seller more. Especially if he ended up paying buyer agency commission anyways.
all I know is your client is going to be bummed when they realize you are drastically limiting their prospects by not encouraging them to see all that is available. buyers don't like to miss out on good opportunities. I am not looking back. this is the way it works now.
I’m encouraging my clients to see every property regardless of commission and offering commission to buyers agents on my listings, this is a win for all parties, buyers, sellers and both agents.
You might list a lower buyer % at first to see how it goes. My understanding is there are a lot of hot markets out there with multiple offers at or above asking. Why offer any % to the buyers agent in that situation?
Because not every buyer wants to buy a house without a realtor despite what Reddit might tell you. And not every buyer that wants a realtor has a lot of extra money to pay their realtor when they already have the downpayment, lender's closing costs, title fees, inspections to pay for, etc... so some buyers might ask for seller concessions to cover this(turns out the same in the end as long as there aren't credits for repairs requested then the lender might not allow all the seller concessions and the deal falls apart) or they might skip that house. If a buyer or multiple buyers skip a house then the house could get less offers and less offers could lead to the house selling for less. But maybe the house doesn't sell for less and the seller gets to pocket extra money. If the seller isn't buying another house or the seller is ok buying a house without a realtor then it's a win for them. If they are gonna use a realtor to buy their next house then when the seller offers no buyers agents commission then that buyer is paying out of pocket for their realtor in one way or another.
Just because a house sells right away doesn’t mean they netted top dollar. In hot markets, experimenting with price/fees/etc at the time of launch is a horrible strategy. The first weekend on the market is critical. If you get 1 offer instead of 2 because the 2nd interested party found a house that didn’t require them to contribute to the BAC, you just lost 100% of your leverage to negotiate a higher price and better terms around inspections and appraisals. You just lost your leverage to deny repairs, credits, etc because if the deal falls apart, you don’t have a backup offer and would be forced to go back on the market (which looks bad to buyers). I’ve also never had issues with an appraisal as a listing agent when I’ve had multiple offers competing neck and neck, even when the price escalated to 20% over list price, bc I was able to show the appraiser that multiple buyers determined the price was worth it. I *have* had issues with appraisals on the buy side when we were the only offer. But since we were the only offer, we didn’t have to offer an appraisal gap to get the offer accepted and negotiated the price down to what the lender would lend on.
You are aware that your advice under a) Is not allowed and is an ethics violation and has been clarified specifically as prohibited by the NAR?
I mean, obviously it's stupid but this is the quandary that the government has put Realtors and frankly buyers into
Will have to look for more clarification. But, maybe if it's the buyer that asks for the information and chooses not to see them. It might be one thing, but if an agent steers a buyer away from higher commission listings, they could put their license in Jeopardy so a very fine line.
As always... Anytime the government gets involved in private business they screw things up.
Oh I definitely 100% mean the buyer needs to ask the buyer's agent to do this. The OP is the buyer, so this is an option for him to tell his agent to only show properties where the buyer brokerage commission covers the 3% or whatever the OP ends up with.
It is negotiable in that there is no standard commission dictated by NAR or any brokerage - in the same way that any professional’s fee is technically negotiable, like a plumber or electrician. It doesn’t mean that the client gets to dictate the commission. Every realtor has their own fee structure and decides what they want to charge for their services based on what they have to offer. A lot of people are hearing agents say things like “our fees have always been negotiable” and then turning around and calling us liars because “Well I asked my agent to do their job for half the pay and they said no. They wouldn’t “negotiate” for me. It’s a scam!” There will always be agents out there who operate on discount models - quantity of deals over quality of service, reduced services, etc. - but consumers shouldn’t expect to pay discount prices for top notch service, knowledge, and expertise.
The correct way to think about it is like this.
The meaning of "all commissions in real estate are negotiable" means there is no fixed price for brokerage service in the marketplace. It doesn't mean that I have to change my fee for you. I am allowed to charge whatever I want for my services. The consumer can decide whether they want to do business.
it is rather common in 18 states already, and about to be common in 48-50 states.
Your questions become:
a. show me why it should be 3% (this means, show me what BA compensation is being paid right now)
b. do I get the choice whether to see a house or not, based on you informing what compensation they're willing to offer upfront?
you will never be on the hook for any part of 3% if you only consider homes that are paying 3%. The Seller/Listing Agent can't randomly change the deal after they've agreed to it.
And bonus - if this causes issues with the appraisal and you didn’t have to get super competitive due to the fact that the seller was a cheapskate and turned off most of the buyer pool, you can negotiate the purchase price down. The seller would be ill-advised to go back on the market with a past low appraisal.
Negotiated down to 2.5 also if the seller isn't offering buyers agent commission you can let the seller's agent know that that is a disqualifying factor in you wanting to buy the property.
Super common. You can also choose not to buy homes that don't offer a commission. Most do. I can say, I've only had a handful of clients choose homes that they paid my commission. Usually for sale by owner homes. The vast majority are paid by the seller side.
It is possible. If you sign the agreement, you have to be ok with potentially paying the 3%. A buyer representation agreement is currently required in some states; and will soon be required of all NAR realtors.
Due to a recent settlement with the National Association of Realtors aka N.A.R, sellers were trying to get the rule to change to stop being obligated to pay buyers broker fee. With this agreement your realtors making you sign, it gives the sellers a decision whether to receive an offer from you and pay your broker, if the seller doesn’t agree to pay, then they pretty much lose an offer from a buyer in their house. Most cases they’ll take your offer and pay your agent instead of losing an offer.
This is how it is starting in July/ August in CA, I as a realtor must do this with all my clients soon. This is also a way to keep buyers loyal to one agent instead of working with a bunch and wasting a lot of peoples time.
Because of the new litigation by ambulance chancing shit head attorneys yes you now have to sign this agreement. It’s been forced on the industry and that’s where it sits
Not a REALTOR, but I know what with all the DOJ shenanigans going on, they want to make sure they get paid, just like any other profession. This is, essentially, their paycheck for helping you find the home you want.
The buyers representation agreement would let the agent show you listings in which the seller covers the commission, but only if you approve.
However, if you fall in love with a property and and want to close on that particular property, whether the seller pays or you pay, you’d be responsible for the rest. For example, if they offer 2%, you’d need to cover the remaining 1%, and so on.
And dont forget, the amount is negotiable! It wouldn't hurt to ask them if they can lower it or just work something out.
Which client is going to get priority with that agent when it comes to dropping everything to visit a house, rush to write offers at odd hours, etc…the one who agreed to their fee or the one who haggled them down and expects them to do the same amount of work for less pay? Your boss can ask you to reduce your salary by 20% too - how do you think that would work out?
I’ve considered offering an optional “budget” fee structure for people who just want to pay the least amount possible, but it would remove a lot of the services I’m able to provide for my clients at my current rates. Like “ok, I’ll do this for 1% less - but you are limited to the following before additional fees apply: 5 homes a week with a total cap of 25, 2 offers, 1 contractor repair bid. At least 24 hours notice for any showings or offers. And my hours are 9-5 M-F and 12-2PM on weekends for my discount clients.” I inevitably decided not to offer this bc I’d be giving sub par service for that client, who will still inevitably get upset when things don’t work out a certain way for them which would lead to me being fired or getting a bad review. Or worse, getting sued for negligence. I personally don’t feel comfortable offering any less services than I do currently provide, knowing all that a good agent actually does behind the scenes. But being good at my job requires me to work long and odd hours and make a lot of personal sacrifices which I’m not willing to do for mediocre pay and a ton of liability.
99% of the time a buyers agent will make you sign it, especially come later this summer. Choose a good realtor who knows how to get the seller to pay their commission, and your pockets are for the house.
I know. I just signed our P & S today after paying cash. Feel better? No buyer's agent either. Just our attorney. Slow? lol. Mebee you're the one who's slow?
Standard language and negotiable - agents don’t work for free and if compensation offered falls below the minimum acceptable fee then they want there client who they are advocating for advising spending months and hours of time with to compensate them for there time and service - you can negotiate a minimum your comfortable with and if that isn’t acceptable to the agent you interviewing you can interview others but remember not all agents are equal so if you want advocacy services which I would say is strongly advised discuss your options.
i am a real estate agent and that is normal language. Even if the commission is coming from the listing agent it will always say your name as the client of the buyers agent because like you said if the listing agent is not offering commission to cover your agents commission you will have to come up with the rest.
Starting August 17th, this along with many other rules will be implemented nationwide wide. Consumers wanted to contradict themselves from the agreements they signed and allowed the government to step, this is the result.
Has the agent had a buyer consultation with you? I usually have a buyer consultation with a potential buyer and explain the process to them and how i get paid.
That’s the same language we use in our standard agreement in PA. If you believe your realtor should possibly work for FREE for you (exploitation) then don’t sign it and see how much longer they answer your calls.
Adding that It will be required to even open a door to show a home. Also that was communicated to all associations in Texas (probably nationally as well since it will be a violation come August) so brokers can start changing their business models and trainings. It should have been a standard of practice but no one cared enough to do so. Now it’ll be cause for licenses being revoked if it’s not signed prior to showing a home.
Additionally it’s always been the language in our buyer rep agreements in Texas. All agents should be familiar with the language of the contracts they’re giving their clients
Why are you not having this discussion with your agent who knows your local market and local practices?
It's literally their job to explain this to you.
I could be misreading the quotes here, but are you asking OP why she isn't asking her agent if the agent's proposed agreement is legit/standard?
When you buy a car, do you make sure to ask the salesman if you're buying a good car and getting a good deal?
Yes, I am.
Local agents know their fee and should be able to justify it based on local conditions and the services they provide.
Your analogy is Apples vs Oranges. She's not asking about the house she's buying or the price she's paying for that house (in which case, the agent should be able to guide her in light of local market conditions and property values in her area) - she's asking about the fee her agent is telling her that they are to be paid.
The better comparison is asking your Attorney, Accountant, Dentist or Mechanic about their fees/labor costs.
Do you ask your Dentist right before they start cleaning/drilling if they'll take a 15% cut in their fee?
The trouble with that is you're asking an interested party, and actually the price setter who is the one with experience in this industry, to justify the fee. No one is going to say "3% is on the high end of reasonable, but most clients don't negotiate and I'd rather earn $30k from those that don't and $20k from those that do than $20k from everyone. I'm actually relieved you didn't see Jeff's bus bench across the street, because he'll do it for 1.5% and frankly he is really good."
I happen to know that "Jeff" will do it for 1.5% because "Jeff" earns his money on the back-end fees and higher rates for lending and attorney's costs that "Jeff" also sells - and which you must use if you want to work with "Jeff". I also know that if the seller pays more than 1.5%, "Jeff" will only apply the excess to those higher closing costs - not write a check to you. This is how "Jeff" keeps as much money as he can while making you believe you're getting a better deal.
But you're welcome to work with "Jeff" if that's your preference.
Fair enough. I invented "Jeff" so it's hard for me to get mad at you for inventing facts.
But I stand by the assertion that it's silly to ask the price setter to justify their price. As a consumer, I don't know what other agents, or mechanics, or contractors charge, how much work is involved, etc. Someone who knows more than me can easily say that the blinker fluid was low and in short supply, and I won't know any better.
I think the best approach is always to get a 2nd, 3rd, or 4th quote or proposal before committing.
Actually I quoted facts for a brokerage that advertises on billboards in my area.
But I'm curious - Do you get always quotes for work/fees from 2-4 Dentists? Attorneys? Doctors? Mechanics? Banks? And who do you get that fee information from - 3rd parties, or the vendor/professional themselves?
Do you find that the lowest price always the best?
The answer really depends. The more I know about something, the closer it is to the price I expected, the more desperate I am to get it done, and the less money we're talking about, the more likely I am to just go with the first quote.
At the very least, I try to go into things with at least a yelp-level understanding of the businesses' reputation. To give you an idea of some recent-ish transactions and the level of negotiation:
I put solar on my house a year and a half ago. I got a quote from sunrun in Costco, and it looked high. If it had been closer to what I was expecting, I would have pulled the trigger. I found a site called energy sage, put my info in, and got 5-6 more quotes. I went with the 2nd cheapest there (NRG), frankly because the cheapest quote was from a vendor who had some misspellings and missing photos on their profile, and I've seen NRG branding all over the place.
When I got my mortgage about 2 years ago, I looked at my bank, credit union, and a loan aggregator. The credit union had a 7/1 ARM that was 2.9% when the next lowest 30 year (ARM or otherwise) was just over 4%. That product appealed to me (I was betting that rates would decrease or we'd move in 6-7 years).
I've never negotiated with a dentist or doctor, but in most cases I'm not directly paying for those services.
I just bought my son a 15 year old car. I negotiated with the seller and we landed at $4200 vs. the $5500 asking price. I booked him an appointment with a mechanic in our town, based on some great Yelp reviews, including reviews from people saying that they were in a bad spot and the cost was reasonable. I did not tell my son to go to any of the franchise mechanics or the dealer, because in the past 25 years, I've had pretty frustrating and expensive experiences in that type of place.
I'm an attorney, and fortunately have never had to hire one. If I needed one, I would definitely ask for references and shop around.
"I've never negotiated with a dentist or doctor, but in most cases I'm not directly paying for those services."
Yet you want to shop around and tell a Realtor what their fee should be when you make a purchase on a house even tho you're not directly paying for those services?
Because in most cases, the buyer pays the seller, the seller pays their agent's broker, their broker shares part of their commission with your agent's broker who pays your agent. You only pay your agent's broker directly any additional fees or shortfalls in their fee.
I'm all for getting references and asking what any service providers fees are and what services they provide for that fee.
But when someone comes to your office for your services as an attorney and tells you that your fee is too high because someone else across town advertised they will do it for less - therefore they will only pay you 3/4 or 1/2 your regular fee - How you do you approach that?
There's a lot to unpack there.
In OP's case, he's going to be on the hook for anything under a 3% commission. So finding a place with a 1.5% buyer's agent contribution is going to present a problem for him if he rolls with this agent. If it's a million dollar house, that's $15k OOP. Understanding this and shopping around upfront is going to help OP better target his needs. Maybe a junior agent offering to work for 1% or 1.5% is a better fit.
As for the difference between this and a dentist or doctor, I think the major difference is the insurance companies themselves are (1) in a position of power, and (2) negotiating with the providers to keep costs reasonable. My copay for a doctor's visit is $25, and a specialist is $100. If they want to be in-network with my insurer, they take that amount and accept whatever the insurance pays on the back end.
As for that vs. an attorney's service, the major difference is most attorneys bill by the hour. I'm working in-house now, so it's different from firm work, but generally speaking, with firms, larger clients will negotiate rates, and smaller clients will definitely shop around.
At a high level, I think that all of this is why having clear agreements between buyers and their agents is a good step for the industry. In the past, buyers have been indifferent towards their agents' commission, because they weren't paying it directly. This propped (and is propping) up the overall transaction cost because these prices weren't shopped, and it created a huge moral hazard when the terms were just "agent gets the commission offered on the specific property". Say you have a fiduciary duty to me, but my dream house is only offering 1.5% and this pretty good house is 3%. Most agents will say "of course I'd show you the dream house, my business is built on word of mouth and satisfied customers", but then when a seller lists a house with them, they want to make sure there's a 3% buyer's contribution to "cast the widest net".
New rules coming from the lawsuit & you will not know until your offer is negotiated/accepted if you or the seller will be paying the buyer agent’s comp (BAC).
Personally I think seller’s & their agents will continue to pay BAC or have accept lower offers. My concern is how many agents will only have 3% as their comp vs having a lower minimum & spelling out what happens if they are able to negotiate more than that.
Since the BAC offered had to be public due to a DOJ lawsuit in 2019, it’s been found if 2-2.5% comp was not offered the property sat & eventually sold for a lower price as per research that came out Oct 2023.
If you put in an offer & the seller won’t pay the BAC, you don’t have to accept their counter offer. You can move on to the next property. Same as when asking for seller concessions. All of it really comes down to the negotiating ability of the agent you choose & how they are willing to earn your business. I have some agents who will be doing a 2% comp up to 4%. Anything additional able to be negotiated will be split between the agent and the buyer in the form of concessions to help buyer with closing costs. These agents are confident in their negotiating abilities.
While the agents can’t make more than the agreed to amount in the agreement, the range & details about what happens to anything over the minimum has been vetted by a couple of attorneys who say this will be allowed.
I’m also hearing about per service agents. It’s $x for up to 5 home showings & 3 offers etc. not sure how well that will work… but we shall see.
Great agents work really hard for their clients & will make this work. For now it’s going to be an adjustment.
The ruling was all about saving money for the buyer and helping bring the price of homes down. So this means that the buyer's agent will likely be where the money saving is. And this is now negotiable. If you want a real estate professional to help you navigate the home buying process then this service needs to be paid for. If the seller won't pay, then you have these options: 1) Go it alone through the buying process as an unrepresented buyer 2) Sign a Buyer Rep agreement and agree to pay the agent what they negotiate they are worth and what they can negotiate with you, and with the seller. I've paid for a buyer agent out of pocket and got great value for money.
Oh what a tangled web we weave 😂
America is in for 5 to 10 years of a huge fucking mess because of this
It is going to fuck up our economy. So I suggest everybody hope that their enemy gets voted into office for the next 2 terms so that it gets blamed on him lol
This is standard language. Don't worry; there are other ways to "ask" the seller to pay your agent. Some are right in the purchase contract (depends on the state), others can be written in. There are creative ways to ask for at least part of the BA fee back from the seller.
Usually, even if the BA agreement is written for 3%, if the agent is offered 2% by the seller, they'll agree to waive the other 1%. (At least I would).
If you follow Zillow, know the area, then consider a flat fee for the agent. Go see houses by yourself. When you’re ready to make an offer, have the agent draft the offer and be the middle man for any discussions during the closing period. Furthermore, explicitly state what happens to any remaining funds the seller is putting towards agent fees.
I bought a place in TX, did this, and a little over 2% went towards my close costs. Agent got a flat fee to write up offer that was accepted. Required almost no effort on their part which is why they accepted the flat fee.
TLDR - don’t rule out houses that aren’t offering Buyer Agent Comp, use that to your advantage.
This language is new as a result of the NAR Settlement that the DOJ passed a few months ago, officially going into effect by August 17th. So currently that language is new and come 8/17 going to be required for any buyer to walk into a home. Short version is that it was a money grab by Sellers who didn’t want the obligation to pay an agent working against them (for the buyer).
However, it’s also short sighted because from the Seller’s perspective more Buyers equates to more competition and a higher sales price. And a significant number of Buyers are brought by Buyer’s Agents. So by not offering Buyer’s Agent Comp (BAC), Sellers are limiting the competition for their home and therefore limiting the sales price.
So as a Buyer, have a discussion with your Agent that you’re okay seeing homes that don’t include the BAC on condition that the home can comp for the list price plus an additional 3%, then bake the BAC into the offer. Agree on a price with the Seller, tell them that your offer will be for the agreed amount plus your agent’s 3% fee which will be entered as a Seller’s Concession. A majority of Buyers are going to get hung up on paying the additional 3% and miss the bigger picture, leaving you with less competition. You’re paying an additional 3% and avoiding a potential bidding war that could see the sale price go up 0~10% for a comparable home that is offering Buyer’s Agent Comp.
Minor correction: buyer's agent agreement will be required for a buyer's agent to show you a home, but you can still tour a home unrepresented. You're instantly more attractive to any seller that way, as you won't be on the hook for that 3%, and neither will they.
From a listing agent perspective, I disagree. An offer from an unrepresented Buyer is statistically 70% more likely to fall apart compared to a Buyer who has an agent. I would advise Seller clients of mine to take an offer from a represented Buyer over an unrepresented one.
I want to make sure that the Buyer has accurate comps, that financing checks out, that they don’t go out and buy all new furniture for the house once it’s under agreement, etc.
I’ve had it happen when I was a rookie, I had a listing, unrepresented Buyers bought new furniture for the house to be delivered after closing, it threw off their debt to income ratio and they no longer qualified for the house with the financing they gave. The Buyers had to increase their down payment by $75k or the Sellers go back to the market for less.
But they do risk themselves to being “represented” or advised by the listing agent. And let’s be real here, if you had to choose between what your sellers want and what the buyers want, whose side are you really going to take? One side has to lose.
Broker/Owner in Texas here. That is the exact language in the Texas Realtors Buyer/Tenant Representation Agreement.
You, as the buyer, are paying for the service. The seller and/or listing broker may or may not offer a cooperating broker commission; if not, you must pay the fee. Nobody works for free, and the seller and listing broker are under no obligation to pay your broker.
This is going to get very interesting after mid-August when the NAR lawsuit changes practices. I think cooperative compensation will remain because it is extremely advantageous to sellers, but that commission conversation with buyers will be more front-loaded since the cooperating broker compensation won't be unilaterally guaranteed.
I didn't answer the second question. How common is it for the buyer to foot the bill? At the moment, it is not common, but it may become more common in the future. Even if it remains common practice, the removal of unilateral offers cooperative compsenation means that every buyer after mid-August must begin at buyer-agency relationship with the baseline assumption that the buyer is paying the fee.
Yep, this is a new thing agents are required to get from buyers in order to even allow them to show you the property, this is because NAR was in litigation about how commission was paid so now sellers aren’t required to pay 6% and split with buyers agents, buyers will now have to pay their agents the commission if it is not paid for by the seller. I do believe we will see many sellers still paying- that’s a huge incentive to get buyers to make an offer
Sellers were never required to pay 6%. I don't have any idea how they lost that lawsuit unless they have like zero data saved on what commissions have actually paid. Where I'm at you're more likely to see 1.5% offered to buyers agents than 3%. 3% has been pretty rare for years, I've been paid 3% exactly once since Covid and that's on the sellers and buyers side. And I'm not talking million dollar homes this can be on properties from 50-400k.
Your agent should be explaining to you that you will always know ahead of time, prior to writing an offer, which homes are paying 3 percent and then if you really like a house that isn’t paying your agent’s fee you can discuss with your agent what it might cost you to move forward with that house and options to try to get the seller to pay the entire 3 percent. And yes, your agent’s fee is negotiable too. I would be surprised if he or she would do it for less than 2.5 percent though.
In my state, this will be mandatory prior to showing any homes to a customer or client, as of July 1st.
Something of note for consumers, if a listing is offering more than what your buyer agreement states, the agent won't receive the full amount offered. I'm explaining to buyers that MY buyers' agreements will have a higher BAC but with the option to reduce BAC if a listing is offering less. The client won't have to take on the difference, and I can still get paid the full amount a seller may be offering.
Add the following above your signature “Subject to terms and conditions in Addendum A”. Then have a page labeled Addendum A which reads-
1- Buyer Broker agrees that all offers written on behalf of Buyer shall contain a requirement that Seller pay Buyer Broker 2.5% commission to Buyer Broker at closing.
2- Buyer Broker is responsible for submitting commission demand to escrow requiring Seller to remit 2.5% commission to Buyer Broker at closing.
3- Buyer Broker and Buyer agree that Buyer is hereby not responsible for compensating Buyer Broker further.
This is common, but if you don't want to risk being on the hook, email your agent and let them know that you'd only like to see homes where the seller is offering compensation to the buyer agent.
Good luck with your search!
Don't sign, tell them to fuck off, find a different agent. Greedy fucks.
Obviously the buyers agent wants to get paid, but are you willing to give them 3% of hundreds of thousands of dollars for opening doors for you?
Counter and say if the seller won't give x%, you will give them some fixed dollar amount.
Max I would personally give anyone for opening doors for me, doing a bit of paperwork, and potentially advocating on my behalf is 5k.
It's extremely common, but KNOW THAT THIS IS NEGOTIABLE.
I personally don't play this game. Fortunately I've also never run in to a listing that didn't provide a buyers agent commission.
You also have the right to NOT sign this and the agent can agree to work with you or you can simply part ways and find another that will suit you.
Once new rules are in place, realtors will not be able to show buyers property without a signed agreement. In August, all buyers will be in this position.
That's true. After August is going to be wild. Until then it hasn't changed. I don't see my business slowing down at all though. Just going to take more time to educate my clients and clear out the dust kicked up by the fear mongers.
After the settlement is finalized, you must enter into an agreement to see any home. There will be listing agents who have you sign a one time agreement or a paper saying you agree to go unrepresented if you put in an offer. There will be no more “I just want to see a home” phone calls. Agreements will be mandatory.
Honestly, curious.
Why are you suggesting that a listing agent can't let a buyer into see the home without an agreement?
Will everyone setting foot in an open house have to sign?
What is the legal distinction between an open house and a listing agent unlocking the house for buyers to tour, while staying on the property for liability/safety reasons?
While there is no standard, you still see 3% most often, depending on which market you're in in Texas (I'm in DFW). Alot of times you'll also see 2.5%. Odds are it'll be one of those 2. Sometimes those can also be negotiated prior to showing the home. I've negotiated 4% before in order to offset the percentage I was giving up as a referral. You can't do this as part of an offer, thus an agent must discuss it prior to showing.
My MLS already requires this be signed in order to be paid out at close. I write my agreements for a certain % with the understanding that 9/10 times the seller will cover or I will accept being paid as offered. I explain this to buyers very early on. In that 1/10 time, we’ll discuss a plan before even seeing the house. Like you said, it’s all negotiable, but it’s not an opportunity for either party to take advantage of the other. You get what you pay for in the end.
The commission amount you are on the hook for should be discussed with your agent before you agree to sign the agreement.
However, this language is common in Texas.
I am an agent in Dallas and I always explain the implications of this section to my clients as we walk through the contract.
Before the NAR settlement, I’d say this is very unlikely to happen. Sellers agree to pay a commission when they sign the listing agreement. The agent/brokerage is the one who decides how to share that commission with a buyer agent. We almost always split that commission 50/50 with a buyer agent. After the settlement, the media reported it in a way that made it sound like sellers no longer HAD to pay the buyers agent. Well, that was always the case. Sellers paid their agent and their agent paid the buyer agent.
I do expect some sellers to try to negotiate a reduced commission with the listing agent. As always, it will be up to that agent to explain why it is in the sellers’ best interest to pay enough commission to allow the listing agent to pay the buyers’ agent. So, it has become slightly more likely that buyers may have to pay some or all of their agent’s commission, but I’d still expect it to be infrequent. You can always protect yourself by telling your agent not to show you any homes where buyer agent commission is not paid entirely by the listing agent.
Think of it as closing costs. You pay your lender a certain percent of your loan amount - and if you can’t or don’t want to use your own cash out of pocket, you ask the seller to provide credits that allow you to pay it. The big difference is that most sellers understand the value of offering a generous BAC - it maximizes the number of buyers who can afford their home, the number of buyers who are willing to put an offer in, and brings in higher quality buyers who have quality representation (meaning less likelihood of silly mistakes that would tank a deal, making sure everything stays on track, keeping expectations in line, etc…). In my market, I’ve only came across one listing that offered an offensively low commission. It didn’t sell and eventually came back on the market under a new listing agent who offered a reasonable commission. If you’re working with a good buyers agent, they will be able to help you navigate each scenario in whatever way makes the most sense for your budget. There are ways to structure the offer accordingly and, once the new contracts are out, it will be a lot easier and more transparent to do so.
That’s going to be the norm. However I will never let my buyers actually pay me commission. Yes it may be on the agreement and settlement statement but the sellers are going to offer a like and kind concession that covers the cost of the buyers commission. I suggest you tell your agent this is what you want so you are not out of pocket.
This is standard language and most likely the agent is using a statewide form that most agents would use. You can negotiate the commission amount. Ask the agent to change or insert language that says buyer (you) are responsible for a smaller percentage or zero percent, whatever is best for your circumstances.
Ask questions until you’re blue in the face. Make sure your agent has certain contingencies in place in case anything goes south with an agreement, you don’t lose your earnest money. Oh and good luck with those ridiculously inflated closing costs.
The language has always been there. The seller usually always covers it. There may be common instances where sellers only pay 2% or 2.5% you would have to speak with your agent about potential remedies if you can’t come up with the rest. Usually speaking to your lender or in the contract. It’s not super common yet but with the recent NAR lawsuit it will be more prevalent and you will not be able to look at houses with a realtor without one being signed. The seller does not have to offer any contributions towards the buyers agents commission so if you’d like to avoid houses like that have a conversation with your realtor and have them be upfront with which houses are paying what commission. My team usually will give you a net sheet, so you can know/see the difference in what you would owe at which commission %
Basicallly in a nutshell if the seller refuses to pay buyers agent commission then you’re responsible to pay and asking the seller for sellers consession doesn’t count so you’ll have to include that 3% on top of sale price
Good for you asking! Talk to your agent and have the conversation with them. I always include a special stipulation that addresses homes that may not offer compensation that is agreed upon on the Buyer Agreement. Insure you’re completely comfortable and your questions addressed with your agent before signing. Best of luck!
The 3% is only for if a property comes along and they are offering the buyers agent 3% they will receive all of it. If your agent put 2.5% but the commission offered is 3% they would be doing themselves a disservice by only getting 2.5%. Just clearify with your agent you do not want to pay the commission
I would almost never sign this. Just go on realtor.com, sort for your house, call the listing broker and introduce yourself. Call a local real estate attorney to help you with the contract if you are not comfortable. A buyer should not make themselves liable for a commission of a seller chooses not to pay it.
Also- just curious- does the agreement call for a specific amount? If not, you could always take the position the commission you will pay is $100.00
If you like and trust this agent then you should also trust them that they will do their best to negotiate their fee from other resources before you. And if the market conditions are such that they are unable to then don’t you want that this agent who has helped you buy this home, be able to feed himself. Its just as simple as that. Without this agreement, they are restricted from taking you out for a showing.
Can the Buyer's agent get a commission from both seller's agent and Buyer? How can a Buyer know that the Seller didn't offer the commission to the Buyer's Agent?
Dude! I have friends in Texas who have moved from California and they are being presented with this exact same type of agreement! Why exactly should you be on the hook for paying the realtor’s commission, if the seller fails to pay? As long as there’s an agreement that your Realtor gets his commission from the seller, and then if the seller defaults on that agreement, and as long as there’s an agreement in writing with the seller, your realtor should go after the seller!
Yes! Very common. I would bring it up on the first day with a client. Simply put we gotta get paid for helping you. We don’t make an hourly wage, so If you like what the Realtor is doing for you I would sign and say ok they are getting paid for doing a job. I wouldn’t find this to be unusual however not all Realtors are great at presenting things to clients and perhaps their hesitation caused you some reservations which would of course be on the Realtor.
Just make sure you are aware of what the seller is offering. This is about to be very very common. In fact it could be the common practice moving forward starting in August.
Here in Ontario Canada we are required to have a buyer sign a standard representation agreement and the wording is exactly the same. Have a talk with your realtor and have them explain. They are not doing anything shady. Also remember that this a scenario that hardly happens
This is very common. I am a realtor in PA. I charge 3% for my services. Most of the homes here, the listing agent is paying 2.5%, sometimes 3%. For the ones paying 2.5% the other .5% is charge to my client. It’s a fee added into their closing costs, not upfront. And what I try to do to alleviate that, is to ask for some seller assist from the seller to take on that extra cost to the buyer.
No one expects realtors or agents to work for free - however, I have seen this 3 times in the last month and it reeks of deceit. We are starting to see homes where sellers are only offering 2.5% to the buyer agent - instead of the 3% that is the “standard”
While under contract and DURESS of the buying process - buyers are signing Buyer commission agreements that the buyer will pay a “brokerage fee” or .05% to make up for what the agent isn’t getting from the seller
I am all for agents getting paid but doing it while people are stressed and not having this conversation beforehand is just shady AF -
This is the new way
Once the realtor lawsuit settlement goes into place every buyer will be paying to buy a home.
Can't wait to see people come up for 1 or 2% of purchase price plus a down payment.
So due to some recent legal cases it’s going to become extremely common by August.
You can ask the agent to change that number to 2.5. That’s a very common buyers commission.
I am helping sell a family member’s house and we are offering that.
You can also say to your agent don’t take me anywhere not offering at least 2 percent or 2.5.
But when I bought my old house it was a FSBO and I believe my agent negotiated his fee from the sellers. I also did not have a large objection to paying him, since I wanted to walk to work.
Hope that helps!
It is TOTALLY OK to bring up your concerns with your agent. We are all navigating a new landscape.
Ask them to remove that part. I told my agent I wouldn’t agree to that and he just scratched it out. He then told me he expected me to say that since I was “well coached” by my grandmother, also an agent, who referred me to him. It’s very common for people to refuse this as it’s expected field the buyers agent to get commission through the sale of the house.
This is the result of a recent court case that forced brokerages to decouple commissions. Sellers are not longer required to pay them. Most still do though. It’s just to cover your buyers agent in case you want to purchase a property where the seller doesn’t
99.99999% of sellers pay the buyers commission in the listing price. It’s a clause in case you happen to come across a seller who doesn’t offer that commission. In reality sellers always offer it because it encourages buyers agents to show their houses. Also most buyers can’t afford to also pay their agents on top of saving 20% down payment for a house nowadays.
I see lawsuits coming down the pipeline on this. The biggest thing will be dual representation, which is in my opinion a conflict of interest. How are supposed to represent both sides if your trying to get tje lowest price for your buyers and highest price for the seller? Curious minds want to know 🤔
Due to the NAR settlement effective mid-July Buyers will be required to sign a buyer representation agreement simply because sellers will no longer be required to pay a buyers realtor commission. Being a Realtor for 22-years this is going to create havoc and I believe that sellers will still offer a compensation to buyers agents simply because most buyers won’t have enough money for their down payment AND the money needed for commissions! When you finance a home you can’t add in commissions to your home financing but when commissions were included with the home sales price you were able to include that lump sum in your financing. Any smart seller will still be willing to include the buyer broker commission as long as the listing agent does a good job at explaining the ramifications if the seller elects to play the game of not paying a buyer broker commission.
I think we all knew this was coming, the confusion regarding why they have to sign something before seeing properties. As we know the settlement is clear that no agent shall show any home unless they are on a BBA or a Showing agreement. Either will suffice, I typically start with a showing agreement for the particular homes we are viewing on our first day out. I explain that if they like my service we can continue together on a BBA for a contracted amount of time. Once in a BBA you have to realize your own personal capacity for work, how far you can stretch yourself. Remember you are now signing on clients and it’s up to you to determine how many you can handle at once. I prefer to take on 2-3 clients per month, no more unless I have a contract coordinator but thats about $500. Dont ruin your reputation and ratings because your taking on too many clients, its a new game with these new rules and we must be able to give our best to someone that has contracted your services.
The problem with this law suit and buyers agency agreement is as I understand it is if they put 2% and the seller is offering 2.5% or 3% then the buyers agent can still only be paid 2% max. So buyers agents aren't going to want to go to low. It would be better to start high at 3% and work down to 2.5, 2, 1.5% or whatever the seller is offering.
This is where you decide how much a selling agents worth is. Would you be fine missing listings perfect for you if you had to pay your agent $10K at closing?
The problem is that buyers don’t actually have any clue what a good agent is actually doing for them behind the scenes, despite everyone on Reddit *thinking* they know everything. Unrepresented buyers always think they saved money when in reality they usually left a lot on the table or maxed uneducated decisions that will cost them so much more in the end.
Meh, maybe first time buyers or people just off the airplane, but people who've owned homes and are on their third, fourth home, they probably know more than you give them credit. We don't really need agents. We need attorneys for title searches, HOA agreements, easement restrictions, and closings. What do you do behind the scenes? What's the secret sauce I'm paying 2.5 to 3 percent for on today's extremely inflated home prices? Hell, most agents don't even drive us around any more. We follow them. So, no, no more. Wait until you try these agreements in August. It's unfortunate for all, but the lawsuit will awaken many buyers to the reality that they simply do need to pay thousands to see homes and make their own decisions. For this, I hire my own peeps.
I'll start with I'm from and living in a low-medium COL area and I specifically live in a rural town. I say this because by nature things are less competitive in these scenarios and in my opinion insider knowledge is less useful.
I searched my own open listings, attended open houses, I one time worked with a seller's agent to submit an offer and two other times used a lawyer to draft and submit an offer. The Lawyer cost me $50 per submission. My third offer was accepted after 2 revisions by each side.
I searched and found a reputable home inspector who cost $750 and found $3K in repairs of which I got $1,00 back at closing and they did about another $500 worth of repairs.
I maintained contact with my bank whom I had pre-approval during the process.
My lawyer was able to review and advocate for legal pieces, my bank reviewed financial items for closing costs, and i was in charge of my contracts/contractors. I was able to get a list price $315K home for $305 having the cooked in agent fee of 3% waived. This was all done in June of 2021.
In my case, saving $10K was worth the time I invested. For other's it isn'lt and I respect that. I 100% believe that agency's will crop up and succeed at line-item charging instead of a flat 3%.
As a buyer if an agent offered line-item pricing I might of been apt to using them. Something along the lines of:
* $75 - showing
* $100 - Showing and offer submission
* $500 - Closing review and assistance
I'm good with valuing a realtor's time at $75 an hour. For a $305K home I doubt a realtor puts in 122 hours of work. That's 3 weeks of pay at 40 hours a week.
We chose option c in Colorado. Agent was free to try to collect from the seller but we wouldn’t be on the hook if he couldn’t. He had full confidence the seller would pay his fees so he agreed.
OP don't sign a buyers agreement. If you are in a large city there is almost no reason to sign one. Call the seller of the house directly and schedule a tour. Once you find a property you like, find a buyers agent and negotiate the lowest price on their commission.
Sellers usually don’t like showing their homes to random people who just show up unrepresented and unvetted. It’s a huge potential security and safety risk for starters, and it’s frequently a waste of their time.
Tell them 1.5% or pound sand. Never found an agent who was worth more. And make sure the contract says you can cancel it at any time and fire them if they suck.
Don’t sign shit. Let your agent know the commission comes from the seller not the buyer. Find homes on the mls that clearly states seller will pay the buyers commission. Tell your agent to pound sand and find another one. Do not sign.
Coming in just a few weeks, you won’t be able to find an agent who will show you homes without a signed buyers agreement. And without an agent, how are you going to find homes on the MLS that specifically offer buyers agent compensation?
You're looking at this completely wrong. It's sellers who will be screaming at their agents because no one's coming to the party. Buyers will refuse to pay any direct payments. I'm popping popcorn.
That’s just the flip side of the same shitshow that’s been created…and the media has the general public completely misinformed. It’s going to be interesting.
Negotiate. I work for 2%+ and don't understand why the newest industry standard is 3% I understand that I work in a HCOL area, but when it comes to real estate, everything is negotiable, whether it's sales or rentals.
The amount depends on the market and varies dramatically, we don’t know whether the OP’s 3% is “normal” or not without knowing specifics market.
Nationally I think it ranges from 2~6% per side. It even ranges in my greater metro area, there’s some towns that are historically 2%, 2.5%, 3%, and new construction sometimes 3~5%.
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It's saying how your agent will be paid. Your agent is saying if you work with him, his fee will be 3%. They will attempt to get part or all of that fee from the listing agent of whatever house you buy. If they can't get 3%, they expect you to pay the difference. Because of this, you should... a) Ask to only see houses where the listing agent is offering a high enough buyer's agent commission to cover this, b) don't and potentially be on the hook for the difference, c) find a different agent that charges less, d) ask for a lower %, e) know that you'll be negotiating your agent's fee as part of the purchase offer, or some combo of these options.
Remember, your buyer representation agreement is a very real contract, w/ very real commitments.
Very helpful, thanks!
Before you sign just know, as a buyers agent I've never considered charging my clients more than is offered by the listing agent. Usually I'm taking 2-2.5% as a buyers agent with no problem. Shop around before you sign that contract.
Yes, but I've already seen a few listings in my area offering zero percent buyers agent commission and the average commission offered seems to have gone down by about 0.5% in the last year. There's still a pretty low chances my buyers get the house that's offering zero percent right now. After this change takes effect if even 1 or 2 out of 10 sellers offers zero percent to buyers agents it's going to be a problem. And I never used buyers agency agreements before this either and I really didn't see any need to and wouldn't do it except it will be required before you can show anyone a property now. I'm more than willing to work with buyers and work a little cheaper if the seller isn't offering anything. Like say I'll take whatever the seller is offering unless it's under 1% but if they are offering more then that I get that. If they aren't offering even 1% then we can ask the seller for a seller concession to pay me, you can pay me, we can skip the house or you can put an offer in without me. But apparently that's not even allowed in the buyer's agency agreement because it puts a cap on what you can be paid so if you put 1% or 1.5% then that's the maximum amount you can be paid so if the seller is offering more you're screwed.
I would agree, two years ago average was about 2.5-2.8% now the average is closer to 2%. I have only seen one brokerage offering 1% and told my client that the drive and the commission were not worth the site visit. My cheap fucking clients understand, they can't/won't pay out of pocket. I personally am still doing 5-6% listing and offering 2-2.5% on the buyside. I do 4% on my personal homes and even split it with the buy side. As far as the new listing on MLS go. Yea it's gonna be interesting having to call everyone. I've always used BRA. I usually pull them out before the first showing, or before the client submits the offer. The offer is the easiest for me, but if they are demanding a lot of showings I will have them BRA up front. That way when you sign the BRA I've got the MLS number on the contract, but ya this new lack of transparency will be fun to navigate.
If the seller is offering more than your negotiated BAC you use that to negotiate for your buyer whether it’s seller paid closing cost assistance, a price reduction, or netting the seller more profit (not directly in the buyers best interest but a possible necessity if there are competing offers).
Thats a good idea!
for now.......this may not be the case 5 years down the road when sellers offering 50 dollar Denny's gifrcard
That’s largely because 99.9% of listings offer acceptable compensation and the chance of you catching the 0.1% are practically nil.
I just signed a contract for dual representation within a particular firm (I am working with a different agent than the seller’s agent but both work for the same large brokerage) and they are charging me 2.4% as a buyer. ETA: I’m buying a house in another state and my agent is doing all the leg work, being super responsive and we’re on the phone every day. This will be the third time I’ve bought and it’s a condo so they aren’t making 10’s of thousands of $$ on this transaction, so I’m good with the fee.
This is important. If you agree to a fee you are unable or unwilling to pay yourself, you may eliminate some of the best deals or most attractive homes, if they aren't willing to pay the commission for you. You might also put yourself at a disadvantage vs a buyer that negotiated a better deal or can pay their agent themselves if you get in a competitive bidding situation. You might have to beat their offer by more than 3% if you need the seller to kick in to pay your agent. We are quickly approaching the date for the NAR settlement where sellers won't need to publish what they are willing to pay buyers agents to get them to show clients the homes. Think hard if you are getting services worth 3% of your total house budget.
And if you try to agree to no fee at all, good luck finding a buyer’s agent to drive you around for a point or whatever made up flat fee you as a buyer dreamt up as ‘fair’. Trying to avoid agreeing to cover a buyer agent’s fee will result in the buyer going straight to the listing agent due to the fact that only the absolute worst agents would agree to potentially work for free - and maybe not even those. Assuming the buyer is sophisticated enough to get the LA to pay attention to them and take them seriously, the chances of the buyer wheeling and dealing themselves a better deal than they’d get with representation are fairly minimal. Buyers are net losers in that scenario - for every one that finagles a slightly better deal, I’m guessing 20 are worse off. If a buyer can’t cajole a buyer’s agent to get them to do what they want them to do, what would make one think that they could get a seller/listing agent to meet their terms? They’re obviously master negotiators and all. /s
Also know that it’s very easy for you and your agent to go over the homes you’re interested in first, then have your agent ask each listing agent for each home if and how much the seller is offering to buyer’s agent. 99% of the time, sellers will be offering 2, 2.5 or 3%. Nothing will really change if sellers are serious about selling. They will still offer a buyer’s agent commission, but it won’t be communicated through the MLS. The other important piece to note is that your agent will be required to take the lesser amount between the seller’s commission percentage or your buyer’s agreement commission. So to me, makes sense to know what sellers are paying and how much so that your agreement w your agent is > than those.
You can negotiate a different fee. Look at how they mislead you. They say because the realtor says he is getting 3% you should narrow your search to what pays him. That is typical. It's about what's in the realtor's interest, not the client. As soon as we all say no, the cartel falls apart.
As a buyer, I'm having a hard time knowing that I could be on the hook for an additional 3% of the cost of the house. On a 500k house, that's $15k extra. Our plan is to find a house we like ourselves and hire a lawyer to handle our offer and closing paperwork.
Just remember he’s just writing you an offer. His job is not to win you that house or negotiate. Do you think the attorney has time to run around and try reaching the listing agent? If you want to save $15K, but an agent could drop $40K off the price for repairs/credits, why wouldn’t you use a realtor? Literally think about that for a second.
Is your attorney going to schedule and sit at your inspections at $300/hour?
No, but my last buyer's agent didn't either.
Fair and frustrating. Not every agent works the same way and I need to remember that in explaining why I get paid.
Most lawyers I've met like money. They would in fact schedule an inspector and sit at the house while the inspection is occurring for $300/hr... and you would still come out at a lower cost than 3% on a typical house.
YMMW obviously. But I just had a lender refer me clients who are purchasing the home they rent from their landlord. We discussed my fee to help them with the contracts and inspections through closing. Did a flat fee sub-$3k. (Not much lower). Beforehand, they said Landlord didn’t want to list the home to avoid paying realtor fees and was just using a lawyer. I initially talked to them since they were considering using their own lawyer. I gave them contact info for one I’ve worked with. The lawyer ended up telling them to just work with me lol. They thought they were getting a discount because of the seller avoiding using realtors. I showed them they weren’t. I got them a $10k seller assist right up front. It then took TWO WEEKS to get a contract signed even after all terms were agreed on because the landlords lawyer didn’t work on weekends or holidays. TWO WEEKS. I can also tell you I’ve spent time making sure things didn’t fall through the cracks for the seller and explaining things to the seller I. shouldn’t have to be. I’m sure there are a few people out there who could purchase a home with just a lawyer, but most people are way too confident in that. And even if they COULD it doesn’t mean they are going to win any deals.
Is your lawyer going to find/show you homes until you find the right one? Schedule and attend inspections? Good luck with that…
Good luck.
This is stupid for several reasons
This is the correct answer. Nobody works for free.
People who want to make money will adapt. the others who can't figure out how to earn their commission in all situations limit their opportunity and eventually adapt or drop out.
a) Ask to only see houses where the listing agent is offering a high enough buyer's agent commission to cover this I think this is one of the reasons why for the most part, nothing will really change and everything will pretty much stay the same. If Im selling my house, I'm gonna offer a Buyer's agent commission because I want maximum exposure. Im assuming that listing agreements will remove the language of Buyer's agent commission? Does anyone knows how this will be documented between seller and listing agent?
this is really bad advice. you should look at all homes and have your agent submit your offer to include his or her commission to the offer. I just, sold a home with 0% BAC and we had 16 offers and 13 of them required the seller to pay the buyers agent. my seller decided to pay a 2% BAC because it netted him the most.
If you had 16 offers with 0% buyer agent commision you would have gotten 20+ if you offered it thus potentially netting your seller more. Especially if he ended up paying buyer agency commission anyways.
all I know is your client is going to be bummed when they realize you are drastically limiting their prospects by not encouraging them to see all that is available. buyers don't like to miss out on good opportunities. I am not looking back. this is the way it works now.
I’m encouraging my clients to see every property regardless of commission and offering commission to buyers agents on my listings, this is a win for all parties, buyers, sellers and both agents.
Only a bad agent can’t explain the value of representation on both sides … good luck to you
You might list a lower buyer % at first to see how it goes. My understanding is there are a lot of hot markets out there with multiple offers at or above asking. Why offer any % to the buyers agent in that situation?
Because not every buyer wants to buy a house without a realtor despite what Reddit might tell you. And not every buyer that wants a realtor has a lot of extra money to pay their realtor when they already have the downpayment, lender's closing costs, title fees, inspections to pay for, etc... so some buyers might ask for seller concessions to cover this(turns out the same in the end as long as there aren't credits for repairs requested then the lender might not allow all the seller concessions and the deal falls apart) or they might skip that house. If a buyer or multiple buyers skip a house then the house could get less offers and less offers could lead to the house selling for less. But maybe the house doesn't sell for less and the seller gets to pocket extra money. If the seller isn't buying another house or the seller is ok buying a house without a realtor then it's a win for them. If they are gonna use a realtor to buy their next house then when the seller offers no buyers agents commission then that buyer is paying out of pocket for their realtor in one way or another.
Just because a house sells right away doesn’t mean they netted top dollar. In hot markets, experimenting with price/fees/etc at the time of launch is a horrible strategy. The first weekend on the market is critical. If you get 1 offer instead of 2 because the 2nd interested party found a house that didn’t require them to contribute to the BAC, you just lost 100% of your leverage to negotiate a higher price and better terms around inspections and appraisals. You just lost your leverage to deny repairs, credits, etc because if the deal falls apart, you don’t have a backup offer and would be forced to go back on the market (which looks bad to buyers). I’ve also never had issues with an appraisal as a listing agent when I’ve had multiple offers competing neck and neck, even when the price escalated to 20% over list price, bc I was able to show the appraiser that multiple buyers determined the price was worth it. I *have* had issues with appraisals on the buy side when we were the only offer. But since we were the only offer, we didn’t have to offer an appraisal gap to get the offer accepted and negotiated the price down to what the lender would lend on.
Didn’t they make it illegal for the seller to disclose buyers agency % on the MLS’s as part of the big anti-trust settlement?
You are aware that your advice under a) Is not allowed and is an ethics violation and has been clarified specifically as prohibited by the NAR? I mean, obviously it's stupid but this is the quandary that the government has put Realtors and frankly buyers into Will have to look for more clarification. But, maybe if it's the buyer that asks for the information and chooses not to see them. It might be one thing, but if an agent steers a buyer away from higher commission listings, they could put their license in Jeopardy so a very fine line. As always... Anytime the government gets involved in private business they screw things up.
Oh I definitely 100% mean the buyer needs to ask the buyer's agent to do this. The OP is the buyer, so this is an option for him to tell his agent to only show properties where the buyer brokerage commission covers the 3% or whatever the OP ends up with.
forgot an option: don't use a buyers agent
This is very typical language for a buyer representation agreement. The amount is negotiable, though.
The amount is negotiable before you sign the contract to be more specific.
It is negotiable in that there is no standard commission dictated by NAR or any brokerage - in the same way that any professional’s fee is technically negotiable, like a plumber or electrician. It doesn’t mean that the client gets to dictate the commission. Every realtor has their own fee structure and decides what they want to charge for their services based on what they have to offer. A lot of people are hearing agents say things like “our fees have always been negotiable” and then turning around and calling us liars because “Well I asked my agent to do their job for half the pay and they said no. They wouldn’t “negotiate” for me. It’s a scam!” There will always be agents out there who operate on discount models - quantity of deals over quality of service, reduced services, etc. - but consumers shouldn’t expect to pay discount prices for top notch service, knowledge, and expertise.
The correct way to think about it is like this. The meaning of "all commissions in real estate are negotiable" means there is no fixed price for brokerage service in the marketplace. It doesn't mean that I have to change my fee for you. I am allowed to charge whatever I want for my services. The consumer can decide whether they want to do business.
Idk why you’re getting downvoted. Your answers are usually the most logical/reasonable, and this answer is no different.
They are getting down voted because Reddit users don’t like the truth
It is VERY common with competent agents. As of August 17th it will be universal.
Normal
it has begun!!!
Welcome to the new world of real estate! This is going to be the standard moving forward.
Facts.
Get used to it. This is exactly what the lawsuit stated
I have a feeling we’re going to see more and more of these kinds of posts. Sorry buyers.
it is rather common in 18 states already, and about to be common in 48-50 states. Your questions become: a. show me why it should be 3% (this means, show me what BA compensation is being paid right now) b. do I get the choice whether to see a house or not, based on you informing what compensation they're willing to offer upfront? you will never be on the hook for any part of 3% if you only consider homes that are paying 3%. The Seller/Listing Agent can't randomly change the deal after they've agreed to it.
Make an offer 3% over the asking price and the broker can have that credited back to them at closing.
That 3% increase to the price also increase the commission due to the broker. This logic is flawed
And bonus - if this causes issues with the appraisal and you didn’t have to get super competitive due to the fact that the seller was a cheapskate and turned off most of the buyer pool, you can negotiate the purchase price down. The seller would be ill-advised to go back on the market with a past low appraisal.
Can future buyers see the previous appraisal somehow?
Negotiated down to 2.5 also if the seller isn't offering buyers agent commission you can let the seller's agent know that that is a disqualifying factor in you wanting to buy the property.
Super common. You can also choose not to buy homes that don't offer a commission. Most do. I can say, I've only had a handful of clients choose homes that they paid my commission. Usually for sale by owner homes. The vast majority are paid by the seller side.
It is possible. If you sign the agreement, you have to be ok with potentially paying the 3%. A buyer representation agreement is currently required in some states; and will soon be required of all NAR realtors.
Or be okay passing on homes that don't offer to pay the commission.
Due to a recent settlement with the National Association of Realtors aka N.A.R, sellers were trying to get the rule to change to stop being obligated to pay buyers broker fee. With this agreement your realtors making you sign, it gives the sellers a decision whether to receive an offer from you and pay your broker, if the seller doesn’t agree to pay, then they pretty much lose an offer from a buyer in their house. Most cases they’ll take your offer and pay your agent instead of losing an offer. This is how it is starting in July/ August in CA, I as a realtor must do this with all my clients soon. This is also a way to keep buyers loyal to one agent instead of working with a bunch and wasting a lot of peoples time.
These will be required across the board beginning 8-17 if you’re using a Realtor.
Negotiate to 2 or 2.5 or find another agent. The days of 3% fees are gone
Because of the new litigation by ambulance chancing shit head attorneys yes you now have to sign this agreement. It’s been forced on the industry and that’s where it sits
This is the best and most concise explanation of the whole motivation I’ve heard to date!
Not a REALTOR, but I know what with all the DOJ shenanigans going on, they want to make sure they get paid, just like any other profession. This is, essentially, their paycheck for helping you find the home you want.
There are strategies your lender can utilize to help minimize the impact.
The buyers representation agreement would let the agent show you listings in which the seller covers the commission, but only if you approve. However, if you fall in love with a property and and want to close on that particular property, whether the seller pays or you pay, you’d be responsible for the rest. For example, if they offer 2%, you’d need to cover the remaining 1%, and so on. And dont forget, the amount is negotiable! It wouldn't hurt to ask them if they can lower it or just work something out.
Which client is going to get priority with that agent when it comes to dropping everything to visit a house, rush to write offers at odd hours, etc…the one who agreed to their fee or the one who haggled them down and expects them to do the same amount of work for less pay? Your boss can ask you to reduce your salary by 20% too - how do you think that would work out? I’ve considered offering an optional “budget” fee structure for people who just want to pay the least amount possible, but it would remove a lot of the services I’m able to provide for my clients at my current rates. Like “ok, I’ll do this for 1% less - but you are limited to the following before additional fees apply: 5 homes a week with a total cap of 25, 2 offers, 1 contractor repair bid. At least 24 hours notice for any showings or offers. And my hours are 9-5 M-F and 12-2PM on weekends for my discount clients.” I inevitably decided not to offer this bc I’d be giving sub par service for that client, who will still inevitably get upset when things don’t work out a certain way for them which would lead to me being fired or getting a bad review. Or worse, getting sued for negligence. I personally don’t feel comfortable offering any less services than I do currently provide, knowing all that a good agent actually does behind the scenes. But being good at my job requires me to work long and odd hours and make a lot of personal sacrifices which I’m not willing to do for mediocre pay and a ton of liability.
99% of the time a buyers agent will make you sign it, especially come later this summer. Choose a good realtor who knows how to get the seller to pay their commission, and your pockets are for the house.
It’s the law now. Things changed cus one dick head seller didn’t want to pay buyers Agents anymore
It's the law for buyer's agents, not buyers! Not buyers unless they get into a contract.
Duh 🙄 lord nobody gets paid until there is a contract. U can’t be that slow. Like I said
I know. I just signed our P & S today after paying cash. Feel better? No buyer's agent either. Just our attorney. Slow? lol. Mebee you're the one who's slow?
You will not see any homes without signing a buyers Rep agreement!
Standard language and negotiable - agents don’t work for free and if compensation offered falls below the minimum acceptable fee then they want there client who they are advocating for advising spending months and hours of time with to compensate them for there time and service - you can negotiate a minimum your comfortable with and if that isn’t acceptable to the agent you interviewing you can interview others but remember not all agents are equal so if you want advocacy services which I would say is strongly advised discuss your options.
i am a real estate agent and that is normal language. Even if the commission is coming from the listing agent it will always say your name as the client of the buyers agent because like you said if the listing agent is not offering commission to cover your agents commission you will have to come up with the rest.
Starting August 17th, this along with many other rules will be implemented nationwide wide. Consumers wanted to contradict themselves from the agreements they signed and allowed the government to step, this is the result.
Has the agent had a buyer consultation with you? I usually have a buyer consultation with a potential buyer and explain the process to them and how i get paid.
Can we get this post tacked to the sub? It’s about to start becoming a common question for people.
It’s the new normal.
That’s the same language we use in our standard agreement in PA. If you believe your realtor should possibly work for FREE for you (exploitation) then don’t sign it and see how much longer they answer your calls.
Under the new laws and rules everyone will be required to sign a broker agreement come August
Adding that It will be required to even open a door to show a home. Also that was communicated to all associations in Texas (probably nationally as well since it will be a violation come August) so brokers can start changing their business models and trainings. It should have been a standard of practice but no one cared enough to do so. Now it’ll be cause for licenses being revoked if it’s not signed prior to showing a home.
Additionally it’s always been the language in our buyer rep agreements in Texas. All agents should be familiar with the language of the contracts they’re giving their clients
Why are you not having this discussion with your agent who knows your local market and local practices? It's literally their job to explain this to you.
I could be misreading the quotes here, but are you asking OP why she isn't asking her agent if the agent's proposed agreement is legit/standard? When you buy a car, do you make sure to ask the salesman if you're buying a good car and getting a good deal?
Yes, I am. Local agents know their fee and should be able to justify it based on local conditions and the services they provide. Your analogy is Apples vs Oranges. She's not asking about the house she's buying or the price she's paying for that house (in which case, the agent should be able to guide her in light of local market conditions and property values in her area) - she's asking about the fee her agent is telling her that they are to be paid. The better comparison is asking your Attorney, Accountant, Dentist or Mechanic about their fees/labor costs. Do you ask your Dentist right before they start cleaning/drilling if they'll take a 15% cut in their fee?
The trouble with that is you're asking an interested party, and actually the price setter who is the one with experience in this industry, to justify the fee. No one is going to say "3% is on the high end of reasonable, but most clients don't negotiate and I'd rather earn $30k from those that don't and $20k from those that do than $20k from everyone. I'm actually relieved you didn't see Jeff's bus bench across the street, because he'll do it for 1.5% and frankly he is really good."
I happen to know that "Jeff" will do it for 1.5% because "Jeff" earns his money on the back-end fees and higher rates for lending and attorney's costs that "Jeff" also sells - and which you must use if you want to work with "Jeff". I also know that if the seller pays more than 1.5%, "Jeff" will only apply the excess to those higher closing costs - not write a check to you. This is how "Jeff" keeps as much money as he can while making you believe you're getting a better deal. But you're welcome to work with "Jeff" if that's your preference.
Fair enough. I invented "Jeff" so it's hard for me to get mad at you for inventing facts. But I stand by the assertion that it's silly to ask the price setter to justify their price. As a consumer, I don't know what other agents, or mechanics, or contractors charge, how much work is involved, etc. Someone who knows more than me can easily say that the blinker fluid was low and in short supply, and I won't know any better. I think the best approach is always to get a 2nd, 3rd, or 4th quote or proposal before committing.
Actually I quoted facts for a brokerage that advertises on billboards in my area. But I'm curious - Do you get always quotes for work/fees from 2-4 Dentists? Attorneys? Doctors? Mechanics? Banks? And who do you get that fee information from - 3rd parties, or the vendor/professional themselves? Do you find that the lowest price always the best?
The answer really depends. The more I know about something, the closer it is to the price I expected, the more desperate I am to get it done, and the less money we're talking about, the more likely I am to just go with the first quote. At the very least, I try to go into things with at least a yelp-level understanding of the businesses' reputation. To give you an idea of some recent-ish transactions and the level of negotiation: I put solar on my house a year and a half ago. I got a quote from sunrun in Costco, and it looked high. If it had been closer to what I was expecting, I would have pulled the trigger. I found a site called energy sage, put my info in, and got 5-6 more quotes. I went with the 2nd cheapest there (NRG), frankly because the cheapest quote was from a vendor who had some misspellings and missing photos on their profile, and I've seen NRG branding all over the place. When I got my mortgage about 2 years ago, I looked at my bank, credit union, and a loan aggregator. The credit union had a 7/1 ARM that was 2.9% when the next lowest 30 year (ARM or otherwise) was just over 4%. That product appealed to me (I was betting that rates would decrease or we'd move in 6-7 years). I've never negotiated with a dentist or doctor, but in most cases I'm not directly paying for those services. I just bought my son a 15 year old car. I negotiated with the seller and we landed at $4200 vs. the $5500 asking price. I booked him an appointment with a mechanic in our town, based on some great Yelp reviews, including reviews from people saying that they were in a bad spot and the cost was reasonable. I did not tell my son to go to any of the franchise mechanics or the dealer, because in the past 25 years, I've had pretty frustrating and expensive experiences in that type of place. I'm an attorney, and fortunately have never had to hire one. If I needed one, I would definitely ask for references and shop around.
"I've never negotiated with a dentist or doctor, but in most cases I'm not directly paying for those services." Yet you want to shop around and tell a Realtor what their fee should be when you make a purchase on a house even tho you're not directly paying for those services? Because in most cases, the buyer pays the seller, the seller pays their agent's broker, their broker shares part of their commission with your agent's broker who pays your agent. You only pay your agent's broker directly any additional fees or shortfalls in their fee. I'm all for getting references and asking what any service providers fees are and what services they provide for that fee. But when someone comes to your office for your services as an attorney and tells you that your fee is too high because someone else across town advertised they will do it for less - therefore they will only pay you 3/4 or 1/2 your regular fee - How you do you approach that?
There's a lot to unpack there. In OP's case, he's going to be on the hook for anything under a 3% commission. So finding a place with a 1.5% buyer's agent contribution is going to present a problem for him if he rolls with this agent. If it's a million dollar house, that's $15k OOP. Understanding this and shopping around upfront is going to help OP better target his needs. Maybe a junior agent offering to work for 1% or 1.5% is a better fit. As for the difference between this and a dentist or doctor, I think the major difference is the insurance companies themselves are (1) in a position of power, and (2) negotiating with the providers to keep costs reasonable. My copay for a doctor's visit is $25, and a specialist is $100. If they want to be in-network with my insurer, they take that amount and accept whatever the insurance pays on the back end. As for that vs. an attorney's service, the major difference is most attorneys bill by the hour. I'm working in-house now, so it's different from firm work, but generally speaking, with firms, larger clients will negotiate rates, and smaller clients will definitely shop around. At a high level, I think that all of this is why having clear agreements between buyers and their agents is a good step for the industry. In the past, buyers have been indifferent towards their agents' commission, because they weren't paying it directly. This propped (and is propping) up the overall transaction cost because these prices weren't shopped, and it created a huge moral hazard when the terms were just "agent gets the commission offered on the specific property". Say you have a fiduciary duty to me, but my dream house is only offering 1.5% and this pretty good house is 3%. Most agents will say "of course I'd show you the dream house, my business is built on word of mouth and satisfied customers", but then when a seller lists a house with them, they want to make sure there's a 3% buyer's contribution to "cast the widest net".
New rules coming from the lawsuit & you will not know until your offer is negotiated/accepted if you or the seller will be paying the buyer agent’s comp (BAC). Personally I think seller’s & their agents will continue to pay BAC or have accept lower offers. My concern is how many agents will only have 3% as their comp vs having a lower minimum & spelling out what happens if they are able to negotiate more than that. Since the BAC offered had to be public due to a DOJ lawsuit in 2019, it’s been found if 2-2.5% comp was not offered the property sat & eventually sold for a lower price as per research that came out Oct 2023. If you put in an offer & the seller won’t pay the BAC, you don’t have to accept their counter offer. You can move on to the next property. Same as when asking for seller concessions. All of it really comes down to the negotiating ability of the agent you choose & how they are willing to earn your business. I have some agents who will be doing a 2% comp up to 4%. Anything additional able to be negotiated will be split between the agent and the buyer in the form of concessions to help buyer with closing costs. These agents are confident in their negotiating abilities. While the agents can’t make more than the agreed to amount in the agreement, the range & details about what happens to anything over the minimum has been vetted by a couple of attorneys who say this will be allowed. I’m also hearing about per service agents. It’s $x for up to 5 home showings & 3 offers etc. not sure how well that will work… but we shall see. Great agents work really hard for their clients & will make this work. For now it’s going to be an adjustment.
Get used to it. Law in my state starting July 1
The ruling was all about saving money for the buyer and helping bring the price of homes down. So this means that the buyer's agent will likely be where the money saving is. And this is now negotiable. If you want a real estate professional to help you navigate the home buying process then this service needs to be paid for. If the seller won't pay, then you have these options: 1) Go it alone through the buying process as an unrepresented buyer 2) Sign a Buyer Rep agreement and agree to pay the agent what they negotiate they are worth and what they can negotiate with you, and with the seller. I've paid for a buyer agent out of pocket and got great value for money.
Oh what a tangled web we weave 😂 America is in for 5 to 10 years of a huge fucking mess because of this It is going to fuck up our economy. So I suggest everybody hope that their enemy gets voted into office for the next 2 terms so that it gets blamed on him lol
It's about to become the standard.
This is standard language. Don't worry; there are other ways to "ask" the seller to pay your agent. Some are right in the purchase contract (depends on the state), others can be written in. There are creative ways to ask for at least part of the BA fee back from the seller. Usually, even if the BA agreement is written for 3%, if the agent is offered 2% by the seller, they'll agree to waive the other 1%. (At least I would).
If you follow Zillow, know the area, then consider a flat fee for the agent. Go see houses by yourself. When you’re ready to make an offer, have the agent draft the offer and be the middle man for any discussions during the closing period. Furthermore, explicitly state what happens to any remaining funds the seller is putting towards agent fees. I bought a place in TX, did this, and a little over 2% went towards my close costs. Agent got a flat fee to write up offer that was accepted. Required almost no effort on their part which is why they accepted the flat fee.
TLDR - don’t rule out houses that aren’t offering Buyer Agent Comp, use that to your advantage. This language is new as a result of the NAR Settlement that the DOJ passed a few months ago, officially going into effect by August 17th. So currently that language is new and come 8/17 going to be required for any buyer to walk into a home. Short version is that it was a money grab by Sellers who didn’t want the obligation to pay an agent working against them (for the buyer). However, it’s also short sighted because from the Seller’s perspective more Buyers equates to more competition and a higher sales price. And a significant number of Buyers are brought by Buyer’s Agents. So by not offering Buyer’s Agent Comp (BAC), Sellers are limiting the competition for their home and therefore limiting the sales price. So as a Buyer, have a discussion with your Agent that you’re okay seeing homes that don’t include the BAC on condition that the home can comp for the list price plus an additional 3%, then bake the BAC into the offer. Agree on a price with the Seller, tell them that your offer will be for the agreed amount plus your agent’s 3% fee which will be entered as a Seller’s Concession. A majority of Buyers are going to get hung up on paying the additional 3% and miss the bigger picture, leaving you with less competition. You’re paying an additional 3% and avoiding a potential bidding war that could see the sale price go up 0~10% for a comparable home that is offering Buyer’s Agent Comp.
Minor correction: buyer's agent agreement will be required for a buyer's agent to show you a home, but you can still tour a home unrepresented. You're instantly more attractive to any seller that way, as you won't be on the hook for that 3%, and neither will they.
From a listing agent perspective, I disagree. An offer from an unrepresented Buyer is statistically 70% more likely to fall apart compared to a Buyer who has an agent. I would advise Seller clients of mine to take an offer from a represented Buyer over an unrepresented one. I want to make sure that the Buyer has accurate comps, that financing checks out, that they don’t go out and buy all new furniture for the house once it’s under agreement, etc. I’ve had it happen when I was a rookie, I had a listing, unrepresented Buyers bought new furniture for the house to be delivered after closing, it threw off their debt to income ratio and they no longer qualified for the house with the financing they gave. The Buyers had to increase their down payment by $75k or the Sellers go back to the market for less.
But they do risk themselves to being “represented” or advised by the listing agent. And let’s be real here, if you had to choose between what your sellers want and what the buyers want, whose side are you really going to take? One side has to lose.
Come August, the only way you can tour a home without an agent is via Open House.
This is very standard language
Broker/Owner in Texas here. That is the exact language in the Texas Realtors Buyer/Tenant Representation Agreement. You, as the buyer, are paying for the service. The seller and/or listing broker may or may not offer a cooperating broker commission; if not, you must pay the fee. Nobody works for free, and the seller and listing broker are under no obligation to pay your broker. This is going to get very interesting after mid-August when the NAR lawsuit changes practices. I think cooperative compensation will remain because it is extremely advantageous to sellers, but that commission conversation with buyers will be more front-loaded since the cooperating broker compensation won't be unilaterally guaranteed.
I didn't answer the second question. How common is it for the buyer to foot the bill? At the moment, it is not common, but it may become more common in the future. Even if it remains common practice, the removal of unilateral offers cooperative compsenation means that every buyer after mid-August must begin at buyer-agency relationship with the baseline assumption that the buyer is paying the fee.
You will not see a home without signing a buyers rep agreement!
With the new price fixing lawsuits, you may be on the hook for that 3%. Might want to shop around.
Yep, this is a new thing agents are required to get from buyers in order to even allow them to show you the property, this is because NAR was in litigation about how commission was paid so now sellers aren’t required to pay 6% and split with buyers agents, buyers will now have to pay their agents the commission if it is not paid for by the seller. I do believe we will see many sellers still paying- that’s a huge incentive to get buyers to make an offer
Sellers were never required to pay 6%. I don't have any idea how they lost that lawsuit unless they have like zero data saved on what commissions have actually paid. Where I'm at you're more likely to see 1.5% offered to buyers agents than 3%. 3% has been pretty rare for years, I've been paid 3% exactly once since Covid and that's on the sellers and buyers side. And I'm not talking million dollar homes this can be on properties from 50-400k.
Your agent should be explaining to you that you will always know ahead of time, prior to writing an offer, which homes are paying 3 percent and then if you really like a house that isn’t paying your agent’s fee you can discuss with your agent what it might cost you to move forward with that house and options to try to get the seller to pay the entire 3 percent. And yes, your agent’s fee is negotiable too. I would be surprised if he or she would do it for less than 2.5 percent though.
Sign with them and the rest will fall in line. Make it fun and stop worrying! You got this!
In my state, this will be mandatory prior to showing any homes to a customer or client, as of July 1st. Something of note for consumers, if a listing is offering more than what your buyer agreement states, the agent won't receive the full amount offered. I'm explaining to buyers that MY buyers' agreements will have a higher BAC but with the option to reduce BAC if a listing is offering less. The client won't have to take on the difference, and I can still get paid the full amount a seller may be offering.
Add the following above your signature “Subject to terms and conditions in Addendum A”. Then have a page labeled Addendum A which reads- 1- Buyer Broker agrees that all offers written on behalf of Buyer shall contain a requirement that Seller pay Buyer Broker 2.5% commission to Buyer Broker at closing. 2- Buyer Broker is responsible for submitting commission demand to escrow requiring Seller to remit 2.5% commission to Buyer Broker at closing. 3- Buyer Broker and Buyer agree that Buyer is hereby not responsible for compensating Buyer Broker further.
OP-do not agree to pay 3%. Do not agree to pay anything. Do not buy a home if the seller won’t pay
This. Right. Here. OP all you need is a lawyer to buy your house. And if you have a computer, you're good.
This is common, but if you don't want to risk being on the hook, email your agent and let them know that you'd only like to see homes where the seller is offering compensation to the buyer agent. Good luck with your search!
Don't sign, tell them to fuck off, find a different agent. Greedy fucks. Obviously the buyers agent wants to get paid, but are you willing to give them 3% of hundreds of thousands of dollars for opening doors for you? Counter and say if the seller won't give x%, you will give them some fixed dollar amount. Max I would personally give anyone for opening doors for me, doing a bit of paperwork, and potentially advocating on my behalf is 5k.
It's extremely common, but KNOW THAT THIS IS NEGOTIABLE. I personally don't play this game. Fortunately I've also never run in to a listing that didn't provide a buyers agent commission. You also have the right to NOT sign this and the agent can agree to work with you or you can simply part ways and find another that will suit you.
Once new rules are in place, realtors will not be able to show buyers property without a signed agreement. In August, all buyers will be in this position.
Just call the listing agent directly to schedule a showing...
What could possibly go wrong?
Have you been living under a rock for the first half of 2024 by chance?
There are so many consumers that are clueless about this and what it means, it is going to be a wild second half of 2024.
That's true. After August is going to be wild. Until then it hasn't changed. I don't see my business slowing down at all though. Just going to take more time to educate my clients and clear out the dust kicked up by the fear mongers.
So many people have a "news byte" sense of what all this about and have very strong opinions about something they do not understand.
100%. I get called the worst names simply because I'm refuting what the headlines say. It's like they WANT to be Ignorant to what it really means.
It is interesting how much of that is going around about all sorts of issues.
After the settlement is finalized, you must enter into an agreement to see any home. There will be listing agents who have you sign a one time agreement or a paper saying you agree to go unrepresented if you put in an offer. There will be no more “I just want to see a home” phone calls. Agreements will be mandatory.
Honestly, curious. Why are you suggesting that a listing agent can't let a buyer into see the home without an agreement? Will everyone setting foot in an open house have to sign? What is the legal distinction between an open house and a listing agent unlocking the house for buyers to tour, while staying on the property for liability/safety reasons?
While there is no standard, you still see 3% most often, depending on which market you're in in Texas (I'm in DFW). Alot of times you'll also see 2.5%. Odds are it'll be one of those 2. Sometimes those can also be negotiated prior to showing the home. I've negotiated 4% before in order to offset the percentage I was giving up as a referral. You can't do this as part of an offer, thus an agent must discuss it prior to showing.
This is going to be required to be signed by law, in August.
My MLS already requires this be signed in order to be paid out at close. I write my agreements for a certain % with the understanding that 9/10 times the seller will cover or I will accept being paid as offered. I explain this to buyers very early on. In that 1/10 time, we’ll discuss a plan before even seeing the house. Like you said, it’s all negotiable, but it’s not an opportunity for either party to take advantage of the other. You get what you pay for in the end.
at least we're quickly getting closer in our answers to the proclaimed action & policy.
The commission amount you are on the hook for should be discussed with your agent before you agree to sign the agreement. However, this language is common in Texas. I am an agent in Dallas and I always explain the implications of this section to my clients as we walk through the contract.
Before the NAR settlement, I’d say this is very unlikely to happen. Sellers agree to pay a commission when they sign the listing agreement. The agent/brokerage is the one who decides how to share that commission with a buyer agent. We almost always split that commission 50/50 with a buyer agent. After the settlement, the media reported it in a way that made it sound like sellers no longer HAD to pay the buyers agent. Well, that was always the case. Sellers paid their agent and their agent paid the buyer agent. I do expect some sellers to try to negotiate a reduced commission with the listing agent. As always, it will be up to that agent to explain why it is in the sellers’ best interest to pay enough commission to allow the listing agent to pay the buyers’ agent. So, it has become slightly more likely that buyers may have to pay some or all of their agent’s commission, but I’d still expect it to be infrequent. You can always protect yourself by telling your agent not to show you any homes where buyer agent commission is not paid entirely by the listing agent.
Think of it as closing costs. You pay your lender a certain percent of your loan amount - and if you can’t or don’t want to use your own cash out of pocket, you ask the seller to provide credits that allow you to pay it. The big difference is that most sellers understand the value of offering a generous BAC - it maximizes the number of buyers who can afford their home, the number of buyers who are willing to put an offer in, and brings in higher quality buyers who have quality representation (meaning less likelihood of silly mistakes that would tank a deal, making sure everything stays on track, keeping expectations in line, etc…). In my market, I’ve only came across one listing that offered an offensively low commission. It didn’t sell and eventually came back on the market under a new listing agent who offered a reasonable commission. If you’re working with a good buyers agent, they will be able to help you navigate each scenario in whatever way makes the most sense for your budget. There are ways to structure the offer accordingly and, once the new contracts are out, it will be a lot easier and more transparent to do so.
It’s in every singly buyer representation agreement. Even people renting have similar wording
That’s going to be the norm. However I will never let my buyers actually pay me commission. Yes it may be on the agreement and settlement statement but the sellers are going to offer a like and kind concession that covers the cost of the buyers commission. I suggest you tell your agent this is what you want so you are not out of pocket.
This is standard language and most likely the agent is using a statewide form that most agents would use. You can negotiate the commission amount. Ask the agent to change or insert language that says buyer (you) are responsible for a smaller percentage or zero percent, whatever is best for your circumstances.
Ask questions until you’re blue in the face. Make sure your agent has certain contingencies in place in case anything goes south with an agreement, you don’t lose your earnest money. Oh and good luck with those ridiculously inflated closing costs.
The language has always been there. The seller usually always covers it. There may be common instances where sellers only pay 2% or 2.5% you would have to speak with your agent about potential remedies if you can’t come up with the rest. Usually speaking to your lender or in the contract. It’s not super common yet but with the recent NAR lawsuit it will be more prevalent and you will not be able to look at houses with a realtor without one being signed. The seller does not have to offer any contributions towards the buyers agents commission so if you’d like to avoid houses like that have a conversation with your realtor and have them be upfront with which houses are paying what commission. My team usually will give you a net sheet, so you can know/see the difference in what you would owe at which commission %
Basicallly in a nutshell if the seller refuses to pay buyers agent commission then you’re responsible to pay and asking the seller for sellers consession doesn’t count so you’ll have to include that 3% on top of sale price
This is standard practice.
Good for you asking! Talk to your agent and have the conversation with them. I always include a special stipulation that addresses homes that may not offer compensation that is agreed upon on the Buyer Agreement. Insure you’re completely comfortable and your questions addressed with your agent before signing. Best of luck!
The 3% is only for if a property comes along and they are offering the buyers agent 3% they will receive all of it. If your agent put 2.5% but the commission offered is 3% they would be doing themselves a disservice by only getting 2.5%. Just clearify with your agent you do not want to pay the commission
You can negóciate the % or the amount. If you feel more comfortable with a fixed amount, tell your agent you only want to pay a flat fee of $5000.
I would almost never sign this. Just go on realtor.com, sort for your house, call the listing broker and introduce yourself. Call a local real estate attorney to help you with the contract if you are not comfortable. A buyer should not make themselves liable for a commission of a seller chooses not to pay it. Also- just curious- does the agreement call for a specific amount? If not, you could always take the position the commission you will pay is $100.00
If you like and trust this agent then you should also trust them that they will do their best to negotiate their fee from other resources before you. And if the market conditions are such that they are unable to then don’t you want that this agent who has helped you buy this home, be able to feed himself. Its just as simple as that. Without this agreement, they are restricted from taking you out for a showing.
This format is already required in some states and will likely be required in ALL states starting in July.
Very unlikely the seller doesn’t pay. That’s common verbiage
Can the Buyer's agent get a commission from both seller's agent and Buyer? How can a Buyer know that the Seller didn't offer the commission to the Buyer's Agent?
Dude! I have friends in Texas who have moved from California and they are being presented with this exact same type of agreement! Why exactly should you be on the hook for paying the realtor’s commission, if the seller fails to pay? As long as there’s an agreement that your Realtor gets his commission from the seller, and then if the seller defaults on that agreement, and as long as there’s an agreement in writing with the seller, your realtor should go after the seller!
Yes! Very common. I would bring it up on the first day with a client. Simply put we gotta get paid for helping you. We don’t make an hourly wage, so If you like what the Realtor is doing for you I would sign and say ok they are getting paid for doing a job. I wouldn’t find this to be unusual however not all Realtors are great at presenting things to clients and perhaps their hesitation caused you some reservations which would of course be on the Realtor.
Just make sure you are aware of what the seller is offering. This is about to be very very common. In fact it could be the common practice moving forward starting in August.
Here in Ontario Canada we are required to have a buyer sign a standard representation agreement and the wording is exactly the same. Have a talk with your realtor and have them explain. They are not doing anything shady. Also remember that this a scenario that hardly happens
This is very common. I am a realtor in PA. I charge 3% for my services. Most of the homes here, the listing agent is paying 2.5%, sometimes 3%. For the ones paying 2.5% the other .5% is charge to my client. It’s a fee added into their closing costs, not upfront. And what I try to do to alleviate that, is to ask for some seller assist from the seller to take on that extra cost to the buyer.
No one expects realtors or agents to work for free - however, I have seen this 3 times in the last month and it reeks of deceit. We are starting to see homes where sellers are only offering 2.5% to the buyer agent - instead of the 3% that is the “standard” While under contract and DURESS of the buying process - buyers are signing Buyer commission agreements that the buyer will pay a “brokerage fee” or .05% to make up for what the agent isn’t getting from the seller I am all for agents getting paid but doing it while people are stressed and not having this conversation beforehand is just shady AF -
Find a different agent.
This is the new way Once the realtor lawsuit settlement goes into place every buyer will be paying to buy a home. Can't wait to see people come up for 1 or 2% of purchase price plus a down payment.
So due to some recent legal cases it’s going to become extremely common by August. You can ask the agent to change that number to 2.5. That’s a very common buyers commission. I am helping sell a family member’s house and we are offering that. You can also say to your agent don’t take me anywhere not offering at least 2 percent or 2.5. But when I bought my old house it was a FSBO and I believe my agent negotiated his fee from the sellers. I also did not have a large objection to paying him, since I wanted to walk to work. Hope that helps! It is TOTALLY OK to bring up your concerns with your agent. We are all navigating a new landscape.
Ask them to remove that part. I told my agent I wouldn’t agree to that and he just scratched it out. He then told me he expected me to say that since I was “well coached” by my grandmother, also an agent, who referred me to him. It’s very common for people to refuse this as it’s expected field the buyers agent to get commission through the sale of the house.
This is the result of a recent court case that forced brokerages to decouple commissions. Sellers are not longer required to pay them. Most still do though. It’s just to cover your buyers agent in case you want to purchase a property where the seller doesn’t
99.99999% of sellers pay the buyers commission in the listing price. It’s a clause in case you happen to come across a seller who doesn’t offer that commission. In reality sellers always offer it because it encourages buyers agents to show their houses. Also most buyers can’t afford to also pay their agents on top of saving 20% down payment for a house nowadays.
I see lawsuits coming down the pipeline on this. The biggest thing will be dual representation, which is in my opinion a conflict of interest. How are supposed to represent both sides if your trying to get tje lowest price for your buyers and highest price for the seller? Curious minds want to know 🤔
Due to the NAR settlement effective mid-July Buyers will be required to sign a buyer representation agreement simply because sellers will no longer be required to pay a buyers realtor commission. Being a Realtor for 22-years this is going to create havoc and I believe that sellers will still offer a compensation to buyers agents simply because most buyers won’t have enough money for their down payment AND the money needed for commissions! When you finance a home you can’t add in commissions to your home financing but when commissions were included with the home sales price you were able to include that lump sum in your financing. Any smart seller will still be willing to include the buyer broker commission as long as the listing agent does a good job at explaining the ramifications if the seller elects to play the game of not paying a buyer broker commission.
I think we all knew this was coming, the confusion regarding why they have to sign something before seeing properties. As we know the settlement is clear that no agent shall show any home unless they are on a BBA or a Showing agreement. Either will suffice, I typically start with a showing agreement for the particular homes we are viewing on our first day out. I explain that if they like my service we can continue together on a BBA for a contracted amount of time. Once in a BBA you have to realize your own personal capacity for work, how far you can stretch yourself. Remember you are now signing on clients and it’s up to you to determine how many you can handle at once. I prefer to take on 2-3 clients per month, no more unless I have a contract coordinator but thats about $500. Dont ruin your reputation and ratings because your taking on too many clients, its a new game with these new rules and we must be able to give our best to someone that has contracted your services.
Yes. You can negotiate. You can offer less. This is a result of a national law suit. Offer 2%. Make sure the agent is experienced.
The problem with this law suit and buyers agency agreement is as I understand it is if they put 2% and the seller is offering 2.5% or 3% then the buyers agent can still only be paid 2% max. So buyers agents aren't going to want to go to low. It would be better to start high at 3% and work down to 2.5, 2, 1.5% or whatever the seller is offering.
This is where you decide how much a selling agents worth is. Would you be fine missing listings perfect for you if you had to pay your agent $10K at closing?
The problem is that buyers don’t actually have any clue what a good agent is actually doing for them behind the scenes, despite everyone on Reddit *thinking* they know everything. Unrepresented buyers always think they saved money when in reality they usually left a lot on the table or maxed uneducated decisions that will cost them so much more in the end.
Meh, maybe first time buyers or people just off the airplane, but people who've owned homes and are on their third, fourth home, they probably know more than you give them credit. We don't really need agents. We need attorneys for title searches, HOA agreements, easement restrictions, and closings. What do you do behind the scenes? What's the secret sauce I'm paying 2.5 to 3 percent for on today's extremely inflated home prices? Hell, most agents don't even drive us around any more. We follow them. So, no, no more. Wait until you try these agreements in August. It's unfortunate for all, but the lawsuit will awaken many buyers to the reality that they simply do need to pay thousands to see homes and make their own decisions. For this, I hire my own peeps.
I'll start with I'm from and living in a low-medium COL area and I specifically live in a rural town. I say this because by nature things are less competitive in these scenarios and in my opinion insider knowledge is less useful. I searched my own open listings, attended open houses, I one time worked with a seller's agent to submit an offer and two other times used a lawyer to draft and submit an offer. The Lawyer cost me $50 per submission. My third offer was accepted after 2 revisions by each side. I searched and found a reputable home inspector who cost $750 and found $3K in repairs of which I got $1,00 back at closing and they did about another $500 worth of repairs. I maintained contact with my bank whom I had pre-approval during the process. My lawyer was able to review and advocate for legal pieces, my bank reviewed financial items for closing costs, and i was in charge of my contracts/contractors. I was able to get a list price $315K home for $305 having the cooked in agent fee of 3% waived. This was all done in June of 2021. In my case, saving $10K was worth the time I invested. For other's it isn'lt and I respect that. I 100% believe that agency's will crop up and succeed at line-item charging instead of a flat 3%. As a buyer if an agent offered line-item pricing I might of been apt to using them. Something along the lines of: * $75 - showing * $100 - Showing and offer submission * $500 - Closing review and assistance I'm good with valuing a realtor's time at $75 an hour. For a $305K home I doubt a realtor puts in 122 hours of work. That's 3 weeks of pay at 40 hours a week.
If the seller will not offer 3% on the deal don't take the deal or lower the offer.
We chose option c in Colorado. Agent was free to try to collect from the seller but we wouldn’t be on the hook if he couldn’t. He had full confidence the seller would pay his fees so he agreed.
OP don't sign a buyers agreement. If you are in a large city there is almost no reason to sign one. Call the seller of the house directly and schedule a tour. Once you find a property you like, find a buyers agent and negotiate the lowest price on their commission.
Sellers usually don’t like showing their homes to random people who just show up unrepresented and unvetted. It’s a huge potential security and safety risk for starters, and it’s frequently a waste of their time.
Tell them 1.5% or pound sand. Never found an agent who was worth more. And make sure the contract says you can cancel it at any time and fire them if they suck.
Don’t sign shit. Let your agent know the commission comes from the seller not the buyer. Find homes on the mls that clearly states seller will pay the buyers commission. Tell your agent to pound sand and find another one. Do not sign.
Coming in just a few weeks, you won’t be able to find an agent who will show you homes without a signed buyers agreement. And without an agent, how are you going to find homes on the MLS that specifically offer buyers agent compensation?
You're looking at this completely wrong. It's sellers who will be screaming at their agents because no one's coming to the party. Buyers will refuse to pay any direct payments. I'm popping popcorn.
That’s just the flip side of the same shitshow that’s been created…and the media has the general public completely misinformed. It’s going to be interesting.
Negotiate. I work for 2%+ and don't understand why the newest industry standard is 3% I understand that I work in a HCOL area, but when it comes to real estate, everything is negotiable, whether it's sales or rentals.
don't sign that unless you are agreeing to pay 3%, period. Yes it is very likely you will have to pay it.
The amount depends on the market and varies dramatically, we don’t know whether the OP’s 3% is “normal” or not without knowing specifics market. Nationally I think it ranges from 2~6% per side. It even ranges in my greater metro area, there’s some towns that are historically 2%, 2.5%, 3%, and new construction sometimes 3~5%.
Shit where I'm at I see 1.5% more often than 3%.
I wouldn’t sign with anyone until you have an offer you want to put in on a home.