How Buying & Selling Just Changed August 2024

August 16, 2024

Hey Friends!

You might have heard about some changes in the real estate world recently because of the widely publicized lawsuit. These changes mainly affect how real estate commissions are paid when you buy or sell a home.

Here’s a quick breakdown of what’s different:

**BUYING – How it used to work:** When you wanted to buy a home, you’d work with an agent, and the seller would pay your agent’s commission. This was all set up between the seller and their agent before the house was listed. Most buyers didn’t know exactly how their agent got paid, and there wasn’t a formal agreement between them. (Note: At ACME we have ALWAYS required a written exclusivity agreement between buyer and buyer’s agent notating the length of time they’d be working together, AND that the commissions would be paid by cooperating broker on the listing side.)

**Now:** The law states that before you can start looking at houses with an agent, you’ll need to sign an agreement. This says you’ll work together for a certain amount of time (up to 90 days, then you’d have to renegotiate/renew) and that you’ll pay your agent a fee. But if the seller agrees to pay your agent’s fee when you make an offer, you won’t have to pay it yourself. If the seller only covers part of the fee, you just pay the difference. If the seller doesn’t pay any of it, you pay the full fee you agreed to. These fees are paid when the deal closes.

Example: Your buyers agent charges 3% and you have a signed exclusivity agreement. You find a house you love and it turns out the seller has agreed to pay some concessions (the word commissions is not allowed anymore) to the buyer’s agent of only 2.5% Therefore the buyer will be needing to make up the extra .5% concession to the buyer’s agent as per the original agreement. Now, if your buyer’s agent charges 2.% and the seller is offering 2.5% concessions, the extra .5% DOES NOT AUTOMATICALLY GO TO THE AGENT. That extra .5% will go to the BUYER. Yep!

**What’s the same:** Buyers have always paid the commission, but it was hidden in the house price, essentially folded into the loan. Now, it’s more transparent, so you can see exactly where your money is going, and who is paying who.

**SELLING – How it used to work:** When selling a home, the seller would agree to pay their agent a commission, which would be split with the buyer’s agent.

**What’s different now:** Sellers don’t have to offer to pay the buyer’s agent upfront anymore. They can decide whether they want to do that on a case-by-case basis. However, they still have to pay their own agent the agreed fee. Some sellers might still offer to pay the buyer’s agent to make their house more appealing, and to attract a larger audience of buyers who can make stronger offers on the property because they aren’t coming out of pocket an additional 2.5%. Others might wait to see what the buyer asks for in their offer and decide then. Now, the buyer’s agent’s commission is part of the negotiation between the buyer and seller.

**What’s the same:** Sellers never had to pay the buyer’s agent, but most did because it helped attract more offers. This probably won’t change much—most sellers will still offer some payment to the buyer’s agent.

Feel free to ask any questions!