_edited.png)
NAR Settlement- What Does This Mean For You?
There is so much talk about the NAR settlement and what it means for home buyers and sellers. In this post I'm going to break it down as I see it, and try to keep it simple. There will be a lot of changes, many of which we as realtors are not 100% sure how they will actually work. Just like any changes, there will a learning curve as we all understand what exactly will happen.
Home Buyers Should Interview Several Realtors
The biggest thing that has come out of the settlement is the need for buyer's agents to explain exactly what we do. Similar to when you are selling your home, you would interview several agents to find the right one. However, most people choose a buyer's agent based on a family member, or friend versus interviewing and understanding exactly what a buyer's agent does for you.
The majority of lawsuits in real estate are from home buyers who did not feel like they had good representation and are frustrated with the condition of the home they purchased. One fear I have is that many home buyers may turn to discount agents or choose to represent themselves leaving them open to buying a home without the right inspections, documentation or help.
What Does a Buyer's Agent Do?
Buyer's agents are much more than door openers. Even redfin only pays their door openers, or showing agents, $20 an hour. Anyone can open a door for you. A good buyer's agent is there to negotiate terms for you, protect you and make sure you are purchasing a home you feel secure with. A buyer's agent negotiates your offer, builds relationships with other agents, guides you through legal documentation, timelines and most importantly home inspections. We negotiate any repair requests and make sure you do not lose money when buying a home. Buying a home is a legal transaction and a huge purchase. Knowing what inspections to ask for, what repairs to negotiate and how the process works is the job of your buyers agent.
Home Buyers May Pay Compensation to Their Agent
The other change with the NAR Settlement is that the compensation being offered by a seller will not be public. The seller is allowed to offer compensation, but is not required. To be clear, the seller was never obligated to offer compensation to a buyers agent at any time, and there was never a rule that mandated 6%. In fact, most of my sellers pay anywhere from 1.5%-2.5% depending on what services they need and if they are a past client, or if they are also purchasing a replacement home with me. This worked because a home buyer did not pay commission when buying a home and then paid the commission when selling. This worked well because many home buyers are already tight with down payment and other costs, whereas home sellers usually have equity to pay the compensation for the agents. The seller would offer a buyers agent compensation to bring a qualified home buyer and represent them during the transaction. This benefits home sellers in securing a qualified home buyer, as well as having a smooth escrow as both parties are represented.
Going forward home buyers may need to pay compensation for their own representation if the home seller is not offering to pay the compensation. While I still suggest to my home sellers to offer compensation to a qualified agent to make sure we have a smooth sale, some sellers may choose not to. A experience buyer agent who will protect you should show you why and what they do for their compensation. Remember, buyer's agents work for free until you purchase a home. I guarantee if you have the right agent you will happily compensate them for all of their hard work when you have keys to your new home.
What About Dual Agents?
In the state of California real estate agents are allowed to represent both sellers and buyers in a transaction. The problem with this is when a realtor signs a listing agreement with a home seller they now have a fiducary duty to that seller. If the then agree to represent the home buyer, there is truly no way they can do this fairly as their first duty is to the seller. Many home buyers think they will get a better deal by going to the listing agent. However, agents who do dual representation are normally being compensated both commissions, even if they are discounted. The buyer now has an agent whose first obligation is to the home seller. Do you honestly think that the listing agent will put the home buyer first?
Buyers Must Sign a Buyer Broker Agreement to See a Home
Much like the days of covid, where a potential home buyer wanted to see a home and had to sign a PEAD form to enter the home, starting in July, potential home buyers must have a signed buyer broker form to enter into a home to see it. (Not exactly sure how this will affect open houses).
A home buyer can sign this agreement (BRBC) for just one home, or hire an agent to see all homes. You will be required to sign this form even if you go directly to the listing agent. This will be required for any home buyer to tour a home. This protects the home seller by keeping better track of who is touring their home.
Overall, this settlement is a good thing for everyone. It gives m ore clairity into what realtors duties are and explains compensation more clearly for both home buyers and sellers. The people it may impact the most are FHA and VA home buyers who are already struggling to afford to purchase a home. If the cannot afford representation this puts these home buyers in a position of being taken advantage of during the home buying process.
Think about this as if you were going to hire a lawyer. You would want to interview several and choose one that you felt had the experience and service that you needed. This is where hiring a realtor is headed. Take your time and interview several agents to find the right one to protect you.
If you want to know more about my services, call or text me at 760-310-0166 - or shoot over to my contact me page.
