Thinking of Buying a Home? Get Ready for a New Era in Real Estate
Homebuyer Representation Agreements
Home shoppers who want to work with an agent will have to sign an agreement upfront that details the services that agent will provide and how much they will be paid, including whether it’s through a commission split with a seller’s agent. Typically, an agent who represents a buyer receives around 2.5%-3% commission based on the purchase price of the home. Agents then share part of their commission with their brokerage.
Removing Buyer-Agent Compensation Offers from Home Listings
Traditionally, a buyer’s agent’s commission has been paid by the seller. Agents who work with homeowners to market and sell their home would list the property on an MLS and include how much their client was offering to pay a buyer’s agent, a practice known as an offer of "cooperative compensation." To address this, homes listed on an MLS will no longer include a seller’s offer to cover the cost of a buyer’s agent’s services. However, they will still be allowed to advertise them practically anywhere else.
Where Does This Leave Buyers and Sellers?
Much of how the industry policy changes play out for buyers and sellers will depend largely on the state of the local housing market. In a sluggish market, it’s more likely that a buyer will be able to negotiate for the seller to cover their agent’s commission. In a hot market, where properties are selling fast and receiving multiple offers, sellers will have the leverage to accept an offer from a buyer who isn’t asking for them to cover their agent’s fees.
Will Commissions Come Down?
It’s unclear whether the policy changes will spur sellers or buyers to negotiate lower broker commissions, and whether they’ll succeed if they do. Buyer-agent commissions have eased somewhat this year, but it’s uncertain if the policy changes will lead to lower commissions.
FAQs
Q: What will happen to buyer-agent commissions?
A: Buyer-agent commissions may not decrease, as it’s unclear if the policy changes will prompt sellers or buyers to negotiate lower commissions.
Q: How will homebuyers be affected by these changes?
A: Homebuyers will have to budget for the possibility that a seller won’t cover their agent’s fees, and may have to come to an arrangement with their agent to only pursue listings where the seller is offering buyer’s agent compensation.
Q: What will happen to seller’s offers to cover buyer’s agent fees in MLS listings?
A: MLS listings will no longer include seller’s offers to cover buyer’s agent fees, but sellers can still advertise or offer them through other means.
