I am dedicating the month of May to talking about how the NAR settlement will impact buyers, sellers and agents. Today I am focusing on how it will impact buyers.
The biggest change will be that when a buyer agent shows someone a home, they will have to have a written agreement with the buyer on how they will represent that buyer and they will be compensated.
In the past, most buyer agents just showed properties without any written agreement with the buyer before finding the perfect home. In our market it was the norm and the expectation of a buyer to be able to see a home without having to sign any kind of agreement ahead of seeing a home with an agent. So the big change is now you have to figure out who is going to represent you before seeing homes. You need to understand upfront how your agent will be compensated. Will you be paying the agent directly? Will you negotiate with the seller to pay on your behalf the buyer agent costs? Or will you only look at those sellers’ homes that are willing to pay the buyers fee for you?
We still think compensation will come out of seller proceeds, but now you have to negotiate it with the buyers agent and then that agent has to negotiate it with the listing/seller. Most sellers want their homes shown and want offers and understand most buyers can’t afford to personally pay their normal down payment and lender closing costs in addition to the buyer agent fee for helping them find the perfect home. So smart sellers will likely still budget for this. The difference is the seller will not have it in a contract with their listing agent.
It is important to understand this change doesn’t mean it is an opportunity to pay nothing for an agent to help you through the home buying process.
Buyers sometimes underestimate the amount of work a buyer agent does which includes helping to you get prequalified, helping you understand costs and financing options, search, find the perfect home, point out potential flaws in a home, negotiate agreement not only on price but also on closing costs, closing time, occupancy and repairs, and coordinate the entire process of due diligence and process from inspectors, attorneys, lenders, insurance provider, improvements and more.
Plus, the best agents have a lending partner that they can trust and rely on to get you the lowest closing costs and have a track record of success with getting you to closing on time. Many times these lending partners are even available on weekends and evenings to assist you whereas a typical bank representative is only available Monday thru Friday 9 to 5…when you too are at work and not available to be thinking about questions needing answered about the home financing options.
Clearly 1st time buyers need a lot of guidance, but even buyers that have bought a home in the past need assistance because things have either changed or they don’t remember the process because it has been a while since they last bought.
In the past the smartest buyers put some thought into the agent they wanted to use as a part of their strategy to get the best deal and representation and I think this change is going to make everyone put some thought into it upfront to be sure they are using professional, full-time, & experienced licensed agents.
With our team here at Shannon Rollings Real Estate, our agents are full time agents that have been through an extensive training plan, job shadowed with experienced agents, AND have weekly continuing education. In fact, our goal is for our agents to have 80 hours of continuing education a year whereas a typical agent gets only 10 hours every 2 years. Our agents help hundreds of clients a year and therefore have extensive experience that translates to buyers getting the best representation in our market.
Next week I will talk about how agents may be impacted by this change. In the meantime, if you have questions about how to navigate these changes, give me a call, send an email or text. And remember my team and I are on standby 7 days a week ready to help you take the smoother road to sold.
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