NAR settlement commission tips for buyers.

May 03,2024 | Posted By Flavia Brown in Real Estate

The NAR settlement is expected to become effective sometime in July, 2024, although the date could be extended to November. Prospective homebuyers are concerned that they might have to pay their agent’s commission (broker fee), previously paid by the seller (for the past 100 years).

Following are a few ways buyers can avoid paying a commission:

+ Buy a home or investment property before the effective settlement date.

+ Some sellers will pay the buyer’s agent’s commission (albeit outside of the MLS) by adding the commission to the offer by increasing the offered amount. However, buyers should be cautious about offering too much. Buyer’s agents should diligently analyze the comps to be sure the offer won’t exceed the subject property’s fair market value.

Here’s an example of adding a commission to an offer: Let’s say a buyer is willing to pay his/her agent a 2.5% commission (which is split between the agent and broker), and you make an offer on a $900,000 house. A 2.5% commission on $900,000 is $22,500. So you could offer $922,500 on condition that the seller pays the buyer’s agent $22,500 at close of escrow.

Fannie Mae, Freddie Mac and the FHA have indicated that they’re OK with offers that include compensation for the buyer’s agent. However, that leaves out VA loans, which are mortgages guaranteed by the Department of Veterans Affairs. Buyers using VA loans aren’t permitted to pay real estate agents directly. Buyer veterans are encouraged to negotiate with the seller through the purchase offer for the seller to pay the buyer’s real estate agent and broker.

+ Buy a property at a discounted price low enough to make up for paying a commission.

+ Buy directly through a listing agent. Note: Not a good idea because the listing agent has a contractual fiduciary duty to the seller to get the highest selling price possible and the most favorable terms.

+ If you have to pay a commission, be sure your agent’s specialized services are effective and strong enough to offset paying a commission. Here are ways a good realtor provides exemplary service:
https://homesbyflavia.com/blog/real-estate/homesbyflaviacom-39

Best regards,

Flavia Brown, Realtor® (18 years)
Redondo Beach, CA
Real estate author
CalDRE #01729313
Realty One Group United
homesbyflavia@gmail.com
homesbyflavia.com
310-702-0293 (cell/text)

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