Exciting developments are underway in the real estate sector this month. The National Association of Realtors and multiple listing service (MLS) have introduced new regulations regarding how real estate agents discuss real estate fees. These changes aim to enhance transparency and competition surrounding fees, objectives that Redfin has consistently championed.
We understand that this may seem overwhelming, but Redfin agents are well-equipped to address any inquiries you may have and expertly navigate you through your buying and selling process.
So, what exactly is changing?
Traditionally, it has been customary for the home seller to pay a commission to both their agent (the listing agent) and the agent representing the buyer (the buyer’s agent). While it has always been up to the seller to determine whether and how much compensation to offer the buyer’s agent, the process has evolved in two key ways:
- Disclosure of buyer’s agent fees: Before touring homes, a buyer must now agree to their agent’s fees. This establishes the maximum amount that your buyer agent will receive upon your home purchase.
- Advertising of buyer’s agent fee: Many MLSs are eliminating offers of buyer agent compensation, which are typically used by agents to promote and market listings. While a seller can still compensate the buyer’s agent, they are prohibited from advertising any compensation offers in the MLS unless explicitly permitted by local regulations. As a result, buyer’s agent fees will increasingly be negotiated as part of the offer.
What does this mean for sellers?
Sellers will continue to discuss with their listing agents any compensation they wish to offer the buyer’s agent. In many scenarios, buyers may request sellers to assist in covering the buyer’s agent fee as part of their offer. Sellers will review offers and engage in negotiations, similar to other terms.
What does this mean for buyers?
As a buyer, you will engage in an initial discussion to understand your agent’s charges. Your agent will request you to sign an agreement regarding their fee before viewing homes. You still have the option to request the seller to cover your agent’s fee as part of your offer. Depending on how you structure your offer, the seller could agree to compensate your agent directly or offer closing concessions that you can allocate towards paying your agent at closing.
Why do I need to sign an agreement early in the process as a buyer?
Industry-wide regulations now mandate a written agreement outlining the agent’s fees before home tours. Unless specified otherwise by state laws, signing an exclusive, binding agency agreement is not necessary for touring a home. Different brokerages have varying approaches and policies, with Redfin prioritizing transparency and providing buyers with flexibility.
Is signing a buyer agency agreement required to tour with Redfin?
Unless stipulated by state requirements, Redfin will introduce a simple fee agreement for buyers to sign when requesting a tour with a Redfin agent, disclosing the expected fee to be collected at closing. Many sellers may cover this fee for buyers at closing.
This fee agreement does not bind buyers to working with a Redfin agent. Following an initial meeting with your agent, you will be asked to commit to working with Redfin. Buyers committing to Redfin before the second tour will receive a 0.25% discount off the fee.
What are Redfin’s fees for buyer services?
Redfin’s buyer fees vary per market, designed to provide buyers with a competitive advantage. Committing to Redfin before the second tour results in a 0.25% fee discount, potentially making your offer more appealing to sellers. The amount of buyer agent fees requested in each offer will be considered by sellers alongside other terms.
What if the seller refuses to pay my agent? Am I responsible for paying out of pocket?
Many buyers allocate their financial resources towards down payments, making it challenging to cover agent fees. Most sellers are understanding and willing to cover the buyer’s agent fee from their sales proceeds. If the seller declines to pay your agent or offers partial compensation, buyers can amend their offer, agree to pay the agent directly at closing, or reconsider their decision. Buyers are informed of associated costs before signing a home purchase contract to make informed decisions.
Establishing a strong relationship with your mortgage lender is crucial for structuring offers that align with your financial situation. Redfin’s mortgage partner, Bay Equity, offers loan officers to assist you through this process.
Do sellers have to pay a buyer agent commission when selling their home?
Sellers have the autonomy to determine the amount, if any, to pay the buyer’s agent. Sellers can opt to leave it open-ended, prompting buyers to submit their best offers, including buyer agent compensation, and negotiate from there. Alternatively, sellers can proactively offer a commission or concession for buyers to use in paying their agent, a strategy that can be communicated to buyers and agents during showings. Redfin agents can provide guidance on whether to offer a commission and how much to offer.
How can buyers determine a fair price for a buyer’s agent?
When purchasing a home, it is essential to find the best agent at the best rate. Redfin agents boast extensive experience, with their sales and customer reviews readily available online for assessment. Redfin has structured pricing to be competitive, allowing buyers to connect with agents for further information.
*Bay Equity Home Loans is affiliated with Redfin. Utilizing Bay Equity’s services does not require working with a Redfin Agent. For additional details, please refer to our Affiliated Business Disclosure.