Buyers and Brokers: What New NAR Regulations Mean for You
Starting August 17th, there will be some impactful changes in relationships between brokers, buyers, and sellers in the real estate market.
These regulation updates result from a landmark lawsuit between the National Association of Realtors and homeowners. They are bound to leave buyers and sellers scratching their heads and scrambling to keep up with once-established rules.
Let's discuss what these amendments mean for brokers and buyers and your next step:
What is Changing?
The major shift defines when and how brokers enter into exclusive buyer agreements and will be compensated going forward. Traditionally, a seller would pay the buyer's agent fees indirectly through their proceeds. Now, the compensation responsibility has shifted to the buyers. This move is in both the brokers' and buyers' best interest.
What Does This Mean for Brokers?
When buyers sign an exclusive buyer's agreement, brokers will have more protections to ensure their valuable services and expertise are compensated, guaranteed. That commitment only incentivizes brokers more to find the perfect option for their buyers. MLS-listed properties will also no longer have broker compensation fields and broker compensation information listed for each property.
What Does This Mean for Buyers?
For buyers, signing exclusive agreements with brokers will clearly define your relationship and make you their verified client. Brokers can then be committed to solely representing you, streamlining your process, and removing any potential gray areas that once could have slowed down a sale. And you'll have someone on your side to guide you through the complicated process of buying a property from the moment you step into an open house.
However, buyers still have opportunities to offset costs when it comes to brokerage compensation. All agent commissions remain negotiable, whether you are selling or buying. It's possible that the seller could offer a (full or partial) commission to the buyer's agent. Depending on the amount, this could mean the entire balance wouldn't come out of the buyer's pocket. Currently, Chicago's buyer agents charge an average of 2.5% to represent buyers.
What Are My Options as a Buyer if the Seller is Not Offering a Commission to the Buyer’s Agent?
- You can make a purchase offer contingent on the seller agreeing to pay the buyer’s agent commission.
- You can negotiate a hybrid arrangement where the seller pays part of the commission and you, the buyer, pay the balance.
- You, the buyer, could be responsible for paying the entire commission.
What's My Next Step?
If you're considering buying property after August 17th, your first step is simple. Reach out to a real estate broker you can trust before you begin touring or virtually viewing buildings so they can be there for you every step of the way as you kick off your search. That's where Jose Hernandez can help.
Jose has twenty years of experience buying and selling multifamily properties and is considered one of the top multifamily brokers in Chicago. He focuses on building strong relationships with his clients to comprehensively understand their needs, meaning he can find their dream home more easily. One of Jose's shining achievements was helping a buyer out of options find the perfect property on a Private Listing Network, saving the buyer approximately $100,000 compared to other listings.
As buyers and sellers adjust to these new regulations, Jose is ready to confidently guide his clients through the purchasing process.