Are you a potential home buyer hesitating to sign an exclusive agreement with a buyer's agent? You're not alone. With recent changes to how buyer's agent commissions are handled, many buyers are uncertain about committing to an agent. These changes stem from a lawsuit settlement between the federal government and the National Association of Realtors. Read about it here.
In the past, it was standard for home sellers to pay the commissions for both their listing agent and the buyer's agent. But due to a recent lawsuit settlement, the rules are changing. Sellers are no longer required to pay the buyer's agent commission and it may become more common for buyers to cover this cost themselves.
As a buyer, you may be concerned about getting locked into an agreement that obligates you to pay a commission, even if your agent doesn't end up contributing much to your home purchase. After all, in a competitive market with low inventory, you don't want to miss out on your dream home just because the seller opted not to pay your agent's commission.
Here are a few key things to keep in mind as you navigate this new landscape:
1. Buyer's agents commission expectations
Have an open conversation with potential buyer's agents about their commission expectations and what services they will provide. Make sure you understand what you would potentially owe in different scenarios.
2. agent representation is worth the cost
Consider if having agent representation is worth the added cost for your situation. In some cases, especially for more experienced buyers, working without an agent could make financial sense. For many first-time buyers though, an agent's guidance is invaluable.
3. Negotiate terms that work for you
If you do sign an agreement, try to negotiate terms that work for you, like a shorter contract period or the ability to cancel if you're unhappy with the agent's performance. You could also include language that specifies you only owe a commission if the seller doesn't pay it.
4. Seller is offering a buyer's agent commission
Focus your search on homes where the seller is offering a buyer's agent commission to increase your options and limit your out-of-pocket costs. Your agent should be able and willing to tell you which listings include a commission.
Ultimately, there's no one-size-fits-all answer. Weigh the potential savings against the time, effort and expertise an agent provides. For many buyers, especially those new to the process, having a knowledgeable agent in your corner is well worth it, even if you have to pay a commission. The most important thing is to go in with eyes wide open and find an agent you trust to put your interests first.
