Navigating a Home Purchase Post NAR Settlement
As if the prospect of buying a home was not daunting enough, there is plenty of misinformation about what the process post NAR lawsuit settlement means for buyers. In the digital age, anyone with access to social media or the internet in general can come across as an expert. And believe me, I am fully aware that as you read that last sentence you may wonder what in the world qualifies me to inform you what buying a home post August 17, 2024 entails. Allow me to introduce myself.
My name is Chris Ann Cleland and I am a REALTOR® with Long & Foster Real Estate in Gainesville, Virginia. In February 2005, I gained my Virginia real estate salesperson license and in November 2010, I gained the highest level of license our commonwealth has to offer when I became an Associate Broker. Of course, holding a license to sell real estate does not automatically imbue someone with knowledge sufficient to give quality advice. That comes from multiple sources, the best of which is actual experience.
Since 2005, I have represented hundreds of buyers and sellers navigate our Northern Virginia real estate market and their respective transactions. Zillow seems to think I have represented three-hundred and forty-seven (as of the date of this post,) but the number is higher than that. That particular media site is only as good as the information it gets from the various Multiple Listing Services (MLS) that feed it. My new construction deals or any off market sales will not be present there. If I was helping another agent through their first transaction, or adding my expertise to a complicated listing or purchase process as a second agent, that will also not be represented. In the last twelve months, I have single-handedly helped twenty-three buyers and sellers, eight of whom were helped since our industry’s new business practices were put in place.
WHEN DOES BUYER REPRESENTATION START?
One of the things buyers need to be understand before house hunting now is that they need to enter into a Buyer Representation Agreement before their chosen agent can show them property. It sounds a lot scarier than it actually is, and for agents practicing in the majority of states prior to August 17, 2024, this is a big change. Virginia had taken this position years ago, but dialed it back a bit before the NAR settlement agreement.
Buyer Representation Agreements lay out exactly what the agent is being hired to do, how long the relationship will be and the cost of the agent’s services. It also lays out other things, but those are the big ones.
If someone were to call any real estate agent today and ask to see a property that agent was not personally listing, the agent would need to get a Buyer Representation Agreement together so that they could show the buyer property. Until there is a written agreement, agents can no longer show property to buyers unless they are showing their own listings to unrepresented buyers. (Being unrepresented is not generally something to which buyers aspire.)
WHO PAYS THE BUYER’S AGENT?
The NAR settlement did not mean sellers can no longer pay buyer agents on behalf of their contracted buyers. Read that again. The NAR settlement did NOT mean sellers can no longer pay buyer agents on behalf of their contracted buyers. Sellers can still buyer agents, it simply can not be compensation offered through the MLS. So how do buyer agents get paid by sellers?
Buyer agent compensation is now negotiated through the purchase contract, just like seller paid closing cost help to go toward loan costs would be. If a seller won’t agree to pay the buyers agent, the responsibility then falls to the buyer. Of course, a seller may be wiling to pay some, but not all of the buyer agent compensation on behalf of the buyer. In that case, it would fall to the buyer to make up the difference.
In every single transaction that rounded out 2024 in my business, post NAR settlement, sellers paid the buyers agent in the transaction every time.
In the event the compensation falls to the buyer for a particular property, the buyer can choose to move forward and pay their agent themselves or move on to another property where a seller will pay their agent. As for ways buyers can make the payment for their buyer agent’s services, lenders have ways to work buyer agent compensation into your loan amount.
That is a brief run down of the two main things that changed with the NAR settlement in August 2024. 1) Buyer Agents have to have a signed Buyer Representation Agreement to show a buyer homes and 2) Buyer Agent Compensation, while still allowable to be paid by the seller, is no longer offered in the MLS, but negotiated in the sales contract.
If you are looking to purchase a home, don’t let misinformation keep you on the sidelines. I am happy to discuss the services I provide for buyers and a more in depth look at the ins and outs of the Buyer Representation Agreement. A purchase is a complicated transaction. My job is to keep it simple and advocate for my buyer-clients along the way. Reach out and let’s talk.
Chris Ann Cleland
Associate Broker
VA License #0225089470
Long & Foster Real Estate
Call or Text: 703-402-0037
Email: ChrisAnn@LNF.com
www.UncompromisingValues.com
The opinions expressed in this blog are those of Chris Ann Cleland, not Long & Foster. All content is written by Chris Ann Cleland without the aid of artificial intelligence.