BUYER AGENCY VIDEO
This is a 27-minute video on the new rules regarding buyer agency in the United States that took effect on August 17, 2024.
WHAT YOU NEED TO KNOW
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You may have seen it on the news or read about it online (and it's true). Buyer agency is changing for homebuyers in New Jersey.
Due to a lawsuit that affected the National Association of Realtors, most brokerages, and many MLS systems, new rules have been implemented for real estate agents working with homebuyers. I wanted to inform you of the changes and how we intend to handle them.
Beginning August 17, 2024, a real estate agent “working with" a buyer must enter into a written agreement with that buyer before touring a home, including in-person and live virtual tours. This is a mandatory form that must include the following four things:
1. Disclosure of the amount or rate of compensation the real estate agent will receive from any source and how this will be determined.
2. An amount or rate of compensation that is not open-ended.
3. A statement that the real estate agent may not receive compensation from any source that exceeds the agreed-upon amount or rate with the buyer.
4. Confirmation that broker commissions are not set by law and are negotiable.
Again, these are mandatory changes. All real estate agents must follow this, and all homebuyers must sign an agreement with a licensed agent to view a home. This includes Open Houses.
This decision will make the industry harder for homebuyers, not easier, in my opinion, but we must work with what we have. Don't worry, though. At Streamlined Properties, our goal has always been to be professional, transparent, and a steward in your homebuying journey. That will not change.
If you have any questions, please email us and ask us anything.
Does this mean homebuyers will pay their own commission now?
The answer is maybe. Let me explain.
As a rule of practice, the ruling prohibits buyer commissions from being offered on the MLS. Still, most MLS systems are adding seller concessions to let buyer's agents know whether or not a seller is considering paying a buyer's commission on the sale of their home. In many cases, the buyer's commission may become a part of the negotiation and offer. This is where things get dicey.
Many brokerages, real estate pundits, and real estate agents are scared and misinterpreting the scope of the ruling, but I can't control how other people react to the same settlement. At Streamlined Properties, we aim to keep you fully informed and ahead of the curve so your leverage as a homebuyer working with us is increased against other homebuyers who are not up to speed.
So, to answer the original question, homebuyers may pay none, some, or all of the buyer's commission moving forward. Commissions have always been negotiable, and now will be no different. But now, the commission may be negotiable on both sides. That's where the required buyer's agency agreement comes in.
The written agreement will spell out an expected flat fee, percentage, or range we will get paid if we close a transaction for you as a homebuyer. The average in the past has always been between 2 and 3 percent. If the seller offers a commission that covers what is in our agreement, nothing will change from how we do business now. If they offer less, a buyer may be responsible for the difference between what the seller offers and what is in the written buyer agency agreement.
If a seller does not offer a commission to the buyer's agent, the agreement would require you, as a homebuyer, to pay the buyer-side commission.
MORE YOU NEED TO KNOW
This is a substantive change not just because you pay the commission but also because it is not wrapped into your mortgage. This is why it will become a negotiating tactic along with price and terms when making offers.
I know this is a lot.
It's more important than ever to work with a trusted, professional, and experienced real estate agent, whether you are looking to buy, sell, or invest in real estate. If you had to get surgery, would you want to work with the first surgeon who came up on WebMD or the best in your market? People forget that real estate transactions often represent the most significant financial transactions anyone has ever made, which is why it's crazy that people don't make sure they have the best partner for this endeavor.
I hope we are a match, but only if it's a win-win. We value your time and your search, and we also value our time, so working with clients who are not fully invested in us as advisors isn't a good fit for us.
I want to work with focused, prepared, timely, and responsive clients. I know I give the same in return.
So, if you would like to move forward and sign a written buyer's agency agreement with me, it's time to do that.
One final note on the agreement:
This is mandatory. All realtors in New Jersey must use this exact form. You can not see a home without this or the non-exclusive form. Whether I agree with it or not, this is the new way of doing business. The agreement does spell out remedies for breach of contract. On my end, I believe in free will. If, for any reason, either party is unsatisfied with the relationship, I will be happy to terminate these agreements in writing.
As the real estate business pivots, I am also pivoting to a more concierge level of service for clients who sign on to have me represent them in their real estate search. Signing an exclusive agreement has to be worth my time and yours.
If you think that non-exclusive contracts will work for homebuyers, they won't. No real estate agents worth working with will sign an agreement with you each time they show you a home to hope you will work with them on that one property. That makes no sense.
Here are some of the perks of partnering with me in an exclusive buyer agency agreement:
- I have been walking houses since I was a baby. As an adult, I have 35 years of experience as a real estate investor, looking at and evaluating homes.
- I have a YouTube playlist about Buying a Home with 91 videos I recorded that you can learn from.
- I have a YouTube playlist about Buying a Home with 91 videos I recorded that you can learn from.
- I have a YouTube playlist about Home Inspections with 8 videos I recorded that you can learn from.
- I am creating a Private Slack Community for homebuyers who want to participate. Videos created just for this group will be available in this community.
- Invitations to client appreciation events. These were previously only open to past clients, but we will now open them to clients with an exclusive agreement with us. The next one is in October at Alstede Farms in Chester.
- All exclusive buyers will get access to a shared Google Sheet with a record of every home we have seen, the dates, the price, and then what the house sold for. This way, you can keep track of how much work we have done together to find you the best home.
- Access our exclusive partnership with Homebot, where you can track area heat maps and more. P.S.- there is also one to track the value of any properties you own.
- I will create an exclusive buyer agency, Highnote Presentation, as a resource for your home journey.
I take your home search very seriously.
HOW THIS COULD IMPACT SELLERS
New rules related to buyer agency in real estate went into effect around the country on August 17, 2024. However, there are also consequences for sellers.
THE EXCLUSIVE BUYER AGENCY AGREEMENT IN NEW JERSEY
