Laura Schwartz is a licensed Realtor in VA and D.C. with McEnearney Associates in Vienna. You can follow Laura on Instagram at @LauraSchwartzRealtor or her Facebook page. Laura can be reached at 703-283-6120 or Laura@GuidingYourMove.com.
If you’ve read any headlines over the past few months, you’ve heard there are changes coming to the way homes are bought and sold.
I’ve found that while most people acknowledge they’ve seen the headlines, they don’t actually know or understand what those changes mean. Here’s your summary of upcoming changes to real estate sales.
Traditionally, when a seller signed a listing agreement and hired a real estate broker to sell their home, part of that agreement specified what commission they’d pay their own agent and how much of that commission could be used to pay an agent representing a buyer.
Essentially, making it feel “free” to use a buyer’s agent because the buyer wasn’t paying them directly. That fee to the buyer’s agent was always listed in our MLS (the portal we used to advertise homes for sale that feeds to websites like Zillow, Redfin, or Realtor.com).
Beginning August 14, that commission will no longer be advertised in our MLS. The hope of the lawsuit is to decouple commission, i.e. the buyer will be responsible for paying for their own agent in the form of payment at closing like an additional closing cost, and the seller will be their own agent as well from their proceeds like they always have.
Top 3 Things to Understand
1. I have found most consumers believe the seller will no longer have to pay a buyer’s agent commission. This was always true. They never had to, but most did. They have changed our sales contract and added the buyer’s agent commission as a line item to our contract right under the price offered. So a seller/buyer can negotiate any compensation a seller would contribute towards the buyer’s agent commission. It’s plain and simple and easy to see and calculate. The takeaway: a seller can still choose to contribute money towards a commission for the buyer’s agent. They can also choose to strike it and offer zero or anything in between. It’s all negotiable.
2. You must have a signed agreement in place to see homes with a buyer’s agent. Buyer agency agreements have ALWAYS been required in Virginia. In truth, sometimes we were just a little more relaxed about when we had people sign them, but they were signed before making an offer. Now, you can’t see a home without signing one, even if it’s a short-term agreement or for a single house. That agreement will dictate how much a buyer has agreed to pay their agent, in the event the seller will not pay anything towards their commission. You can, of course, visit open houses without one since you’re not employing an agent to tour with you.
3. Just like anything new, expect the first few months to be rocky as everyone figures out the new normal. Human behavior is a funny thing, so we’ll see how many continue to act as everything is status quo and how many take this opportunity to try out something new. And once we get a few months into this new normal, it’ll just be the new way of doing things.
“Normal” is a relative term. We used to require 20% down on a loan. Now you can buy a house with as little as 3% down (and 0% if you’re a veteran!). Having inspections was “normal” until people started waving them to be more competitive. So too will this new change eventually become normal.
I think in practice, if you have multiple offers, any contract requesting a seller to pay money towards a commission will be at the bottom. I think if a house has been on the market for a while, that seller might be more willing to contribute money towards a commission, but that also might mean they’re less likely to reduce their price.
It’s all going to look different and feel different, but we’ll figure it out. I think experience matters more than ever right now.
If you still have questions — whether you’re in the market to move or not — you can always reach out to me with any questions.
Happy to give you more information if you need it!
