What is the Real Estate Buyer’s Agreement Rule?

What is the Real Estate Buyer’s Agreement Rule?

The Buyer’s Agent Agreement Rule was implemented on August 17, 2024 by the NAR (National Association of Realtors). It was created to protect the real estate buyer (you) by prioritizing transparency in pricing and services of your realtor. This is a written agreement upon your representation, ensuring that the buyer and the seller have different realtors to prevent a conflict of interest. It’s similar to how you wouldn’t want to have the same divorce attorney as your soon-to-be ex-spouse. You want someone who will act in your best interest. The agreement states which services your agent will provide and how much they will be compensated. You have the right to negotiate your terms, and even mutually agree to end or change the contract as you work together. 

Why did the Real Estate Rule Change?

Previously, if you were selling your home, you would be responsible for the commission of your agent who helped you sell your home. Sellers would also be responsible for compensating the buyer’s agent. That cost would typically be factored into the final price of the home, but it wasn’t always clear what services were provided. Now, the buyer and the seller are each responsible for compensating their own agents. This is similar to how  contracts have always worked for commercial and investment real estate purchases. The benefit of a Buyer’s Contract is that you can have more visibility into services and fees. You can even negotiate with your realtor on how you will compensate for their services! 

How Does the Buyer’s Agreement Benefit the Buyer?

Transparency. The Buyer’s Contract will show you the fees associated with each home. This is important so that you can protect yourself from “steering.” This is an unfortunate practice of dishonest realtors who encourage you to buy a home whose sale will put more money in their own pocket, rather than prioritizing finding the home that’s best for your family. Visibility gives you power and prevents anyone from taking advantage of you. 

Why Do I Compensate my Realtor Under the Buyer’s Agreement? 

Buying a home is difficult to do alone–I wouldn’t recommend it! We want to provide excellent home buying service and support. The thing that keeps me up at night is helping you find the home of your dreams! That means you should tell us what you hope to get out of the partnership, like helping you to find homes that meet your criteria such as budget, location, style and more. We can agree to tours. We can agree to a time frame. 

Another way to help you get value from our partnership is to provide feedback. If I show you a home that wasn’t quite what you were hoping to see–let me know! Don’t be shy about feedback. We can recalibrate, and I can get closer to finding you your dream home.  

How do I Compensate my Realtor Under the Real Estate Buyer’s Agreement?

This can be done a number of ways, none of which are mandated by law. The only obligation is to have a written contract–it’s up to us as a team to decide on the terms. That may sound intimidating, but most realtors will have a standardized contract to give you a starting point. While the seller is no longer required to pay the cooperating brokerage agent, that’s an option that can be negotiated. Again, this document is here to create transparency and hold realtors accountable. While I’m happy to give you my word, I will gladly provide my signature. 

Do I have to Sign a Buyer’s Agreement if I’m Just Going to an Open House for Fun?

No! There’s no need to sign an agreement when you’re casually touring an open house. All are welcome to the open house! In fact, if you’re very early in your home buying journey, going to open houses can be a great way to meet realtors in your area. There’s no need to enter into an agreement until you’d like the realtor to start providing services.

When Does My Realtor Officially Start Providing Services?

Common realtor services include support like sending you new and early listings, joining you on a home tour, or sending you a virtual home tour. They might also check out a home for you on your behalf. Maybe they’re guiding you toward pre-approval and recommending lenders. These are considered services which are worthy of compensation. If you are simply looking for a realtor, calling us and asking about our services, that should not be considered a service. For example, say you’re looking to buy your home in Rochester and you’re ready for professional support. You call a few different realtors to get a sense of what services they offer, and if they’re available to help you. That’s free. A realtor should not be compensated because you introduced yourself. We want to meet you! Once we decide to work together, we will enter a formal agreement that outlines how compensation will work. 

What Next?

Even when change is good, we know it can be complicated. Give us a call or send us a message and Team Austin will be happy to answer your questions and put you on the path to your next home.