Generally , the buyer ' s agent does the most work in a real estate transaction because they tend to interact with almost every party involved in the transaction ( listing agent , mortgage broker or banker , escrow , attorney , and / or title
insurance , appraiser , home inspectors , environmental specialists , etc .). Wouldn ’ t the elimination of a buyer ’ s agent be problematic for many transactions across the nation ?
How will firsttime buyers afford to buy their buyer ’ s agent directly ?
The average firsttime homebuyer invests approximately 6 % of the purchase price . For all homebuyer types ( moveup , 2nd home , investor , etc .), it ' s closer to 13 % nationwide and as high as 18 % here in California .
VA ( Veterans or active military personnel ) homebuyers are not allowed to pay buyer ' s agent fees . Most of them qualify with no money down 100 % LTV
loans . FHA buyers usually come in with somewhere between 0 % and 3.5 % down . Many times , FHA home buyers do not have any extra cash to pay their buyer ' s agents directly .
If homebuyers are now expected to find and hire their own buyer ' s agent and pay them anywhere between 1 % and 3 %, it will be very challenging for many homebuyers to come up with the additional funds to pay their buyer ' s agent directly and purchase their dream home .
Commissions and seller credit negotiations
Commission fees for the listing agent and buyer ' s agent have always been negotiable . This new NAR settlement doesn ' t change that option . Yet , it makes it more challenging for buyers , sellers , and real estate licensees to complete a transaction .
If a buyer prospect signs a buyer ’ s
agency agreement with a real estate licensee for 2 % and the seller or new home builder offers to pay 3 % to the buyer ’ s agent , then can the buyer ’ s agent be paid the higher 3 % commission offered by the seller or is the commission amount limited by the 2 % fee mutually agreed to by the buyer and buyer ’ s agent ? For licensees , this is a topic to be discussed with your employing broker and / or advising legal experts .
Many times , a purchase deal is structured with seller credits that cover the buyer ' s agent and listing agent fees and overall closing cost credits ( loan , escrow , title , inspection , and / or appraisal fees ), which may vary between 5 % and 10 % of the total purchase price . Without these seller credits , the buyers may not have enough of their own funds to cover the required down payment and closing costs with or without being required to pay their own buyer ' s agent .
The rise of dual agency , attorney closings , and selfrepresented deals
This NAR case settlement may set a legal precedent for future courtroom cases to completely outlaw dual agency where one licensee represents both the buyer and seller . I ' ve written real estate courses in more than 30 states over the years and have held eight different real estate , mortgage , and securities brokerage licenses , so I ' m somewhat familiar with the fact that many states already outlaw dual agency .
Many legal groups are behind the push to eliminate real estate licensees so that lawyers handle a higher percentage of closings like they do in New York state and elsewhere . Attorneys like to say that dual agency for Realtors ® is akin to an attorney unfairly representing both sides in a lawsuit .
A buyer ’ s agent is focused on protecting their buyer more than any other licensed or unlicensed professional involved in a purchase transaction . Why would so many people be happy to eliminate the main party who is truly working in the buyer ’ s best interests ?
Contingency dates and disclosure risks
Real estate contracts and inspection reports are incredibly complex . A buyer or seller who attempts to represent themselves in a purchase contract may miss important contingency dates for the completion of the appraisal , home inspection reports , or formal mortgage approval and lose their 1 % to 3 %+ in earnest money deposits .
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