On August 17, 2024, some industry-wide changes took effect that will impact the way people work with real estate agents and buy and sell homes. These changes represent a significant shift in how transactions are conducted, with the most notable updates being the requirement of Buyer Broker Agreements and the removal of buyer-broker compensation offers in the MLS (more on that below).
These changes are designed to increase transparency and fairness in the real estate market, ensuring that all parties have a clear understanding of the services being provided and how they are compensated.
As a company that has always embraced change, @properties Christie’s International Real Estate is ready to help our clients navigate this new environment with confidence and ease. We believe that change often brings new opportunities, and we are committed to staying at the forefront of industry trends to better serve our clients. With a deep understanding of the market and a forward-thinking approach, our team is well-equipped to guide you through these updates.
Here’s a quick rundown of what to expect:
Buyer Brokerage Agreements Are Required
Similar to how home sellers enter into a listing agreement that spells out their broker’s services and compensation, homebuyers will now enter into a buyer-broker agreement that will do the same. This agreement must be in place before a broker can show properties (even just one). The formalization of this agreement underscores the importance of transparency and clarity in the real estate transaction process.
While this might seem like a big shift, the reality is that buyer-broker agreements have been in use for years in our industry. This change simply makes them universal, which is a good thing because the agreement protects the buyer by outlining their broker’s services and fee. By having a written agreement in place, buyers can have peace of mind knowing that their interests are being represented with professionalism and integrity. It also allows for clear communication between the buyer and broker, ensuring that both parties are on the same page regarding expectations and obligations.
Buyer-Broker Compensation Can Be Funded in Different Ways
Since homebuyers and sellers will independently determine the amount they pay their respective brokers, buyer-broker compensation will no longer be displayed in the MLS. This shift marks a move towards a more flexible and personalized approach to compensating real estate professionals, allowing buyers and sellers to negotiate terms that best suit their individual needs and circumstances.
For buyers, this means they may not know if some or all of their agent’s compensation will be covered by the seller. If the buyer makes an offer on a property, they can still ask a seller to fund the compensation through the proceeds of the sale, or they can pay their broker directly (or do some combination of the two). This flexibility can be advantageous for buyers, giving them the ability to craft offers that align with their financial situation while still ensuring that they receive expert guidance from their broker.
For some buyers, it may not be practical to pay a broker’s fee with cash on hand. In this situation, a buyer might choose to adjust their down payment. Credits or grants may also be available through certain lending programs, providing additional options for covering broker compensation. @properties Christie’s International Real Estate’s in-house mortgage lender, Proper Rate, can help you plan for different scenarios.
Ask your agent to connect you with a Proper Rate loan officer who can provide personalized advice and explore various financing solutions tailored to your unique needs.
Sellers Can Still Pay a Buyer Broker’s Commission
As mentioned above, sellers still have the option to compensate a buyer’s broker, whether that’s disclosed upfront or determined through negotiations. Many sellers will choose to fund some or all of the buyer-broker compensation because it will generally expand the pool of potential buyers and facilitate a transaction. In competitive markets, this can be a strategic move that makes a property more attractive to buyers who are working with brokers.
Ultimately, though, it is up to the seller. The decision to offer compensation can be influenced by factors such as market conditions, the level of buyer interest, and the overall goals of the seller. Working closely with a knowledgeable listing broker can help sellers navigate these decisions and craft a strategy that maximizes the potential for a successful sale.
At @properties Christie’s International Real Estate, our agents are experts at evaluating market dynamics and providing sellers with the insights they need to make informed choices.
Offers Will Likely Include Different Compensation Scenarios
Since the majority of homebuyers work with a broker, sellers should expect to receive offers that include a request to fund buyer-broker compensation. This is a new dynamic that sellers will need to consider when reviewing offers, as it could impact the overall terms of the sale. It’s the listing broker’s job to help the seller evaluate the terms of each offer – including broker compensation – to achieve the best possible outcome for the sale.
Understanding the various compensation scenarios and how they affect the bottom line will be critical for sellers. Whether it's adjusting the asking price, negotiating other terms of the sale, or deciding how much to offer in compensation, sellers will need to work closely with their listing broker to ensure that their interests are protected and their goals are met.
At @properties Christie’s International Real Estate, we pride ourselves on our ability to provide expert guidance and support throughout this process, helping our clients make decisions that lead to successful transactions.
Bottom Line
While some things are changing in residential brokerage, many things are not. The fundamentals of buying and selling homes remain the same, with the ultimate goal of helping people find their dream homes or achieve a successful sale.
Most importantly, whether you’re buying or selling a home, your @properties Christie’s International Real Estate agent is here to be your advisor and to represent your best interests every step of the way. With a deep commitment to our clients and a thorough understanding of the new regulations, we are here to make your real estate journey as smooth and rewarding as possible.
