Changes to Real Estate Transactions: What You Need to Know

As of August 17, 2024, there are new requirements for real estate transactions that could impact your buying or selling experience. Here’s what you need to know to navigate these changes smoothly:

What’s New?

For Buyers:

• Written Agreement Required: Before touring homes, either in person or online, you will need to sign a written agreement with your real estate agent if they use the MLS (Multiple Listing Service). This agreement outlines the services the agent will provide and the associated costs.

• No Agreement Needed for Open Houses: You can still speak with agents at open houses without a written agreement.

• Compensation Terms: The MLS will no longer list buyer’s agent compensation details. You will negotiate this directly with your agent before viewing properties.

For Sellers:

• Agent Compensation: The compensation for buyer’s agents remains negotiable. Many sellers may choose to cover this cost as part of the deal, which can be included in your agreement and reflected in the offer to purchase.

How to Pay Your Buyer’s Agent

If you’re concerned about covering your buyer’s agent’s fee, here are 3 options to consider:

1. Direct Payment: Pay the agent’s fee from your cash reserves.

2. Adjust Your Down Payment: Use a portion of your down payment to cover the fee. For instance, instead of a 10% down payment, put down 7% and use the remaining 3% for the agent’s fee. Note that this could increase the cost of mortgage insurance)

3. Include in Sales Price: Add the agent’s fee to the sales price and request that the seller covers it. Ensure that the appraisal supports this higher sales price.

Should Sellers Pay the Buyer’s Agent?

Traditionally, sellers have compensated both the selling agent and the buyer’s agent from the proceeds of the home sale. With the new rules, here’s why considering this option might still benefit you:

• Increased Offer Attraction: Buyers may be more inclined to make offers if they don’t need to cover the agent’s fee themselves.

• Higher Asking Price: You can increase your asking price to cover the agent’s fee, provided the market supports this value.

• Enhanced Sale Process: Buyer-side agents will help sell your home by scheduling tours with qualified home shoppers.

• Avoid Dual Agency: You will avoid the need for dual agency, where your agent must represent both you and the buyer rather than focusing on your best deal.

Negotiating buyer’s agent compensation can ultimately help you achieve your goal of selling your home at the price you need.

Need More Information?

Understanding these changes can help you make informed decisions in your real estate journey. If you have questions or need further assistance, feel free to reach out. The Greenway Team is here to help!