New Buyer Agent Commission Rule Changes For Sellers

Last Updated: October 1, 2024

How to Sell Your Home Without a Realtor Using VELfixi.com

This week, we witnessed a scenario that may soon become a common occurrence in the real estate market. One of our sellers received an offer, but the buyer’s agent requested a 3% seller contribution toward their commission—a practice that happens often. However, the seller countered with no contribution, leaving the financial burden on the buyer.

The buyer, already stretched thin by their down payment and closing costs, could not afford to pay their agent directly and withdrew their offer, resulting in frustration for both parties.

This situation may become more frequent due to recent changes in how real estate agents are compensated, as driven by class action lawsuits and settlements involving the National Association of Realtors (NAR). In this post, we’ll explore the impact of these changes on home sellers and provide strategies to navigate this evolving landscape.

The Traditional Buyer Agent Commission Model

For decades, sellers would sign a listing agreement and agree to pay a commission, often seen around 5-6% of the sale price (always negotiable and never a standard price), which would be split between the seller’s and buyer’s agents. Sellers often felt obligated to fund both sides, and buyers rarely had a say in the fees their agents received.

These frustrations led to multiple lawsuits, which are driving the current rule changes.

The New Buyer Agent Commission Model

With new regulations, two main changes have emerged:

1. Buyer Agent Agreements: Buyers will now sign agreements with their agents, outlining their compensation before any home showings. This shifts the responsibility for paying the buyer's agent onto the buyer, allowing each party to negotiate their commission with their respective agents. The unique thing here is that this discussion wasn't being had and some real estate agents took advantage of this by charging the seller 6%, and paying only 2.5% to the buyer's agents which did not seem to be fair. Thankfully, with VELfixi.com, you are in control of this process.
2. Seller Discretion on Commission Contributions: Sellers are no longer required to publicly disclose any contribution toward the buyer’s agent commission. Similar to how closing cost assistance is negotiated, seller contributions will be discussed privately during the negotiation process and cannot be put onto the MLS. It can however still be displayed in other places, text messages, calls, private emails, VELfixi and other websites that are not bound to NAR.

The Disconnect: Buyer and Seller Expectations

For years, buyers have grown accustomed to sellers covering the buyer’s agent commission, sometimes without realizing it. With the new rules, buyers will now be responsible for their agent’s fees, which may come as a surprise, especially in an already challenging market.

Sellers, on the other hand, may see this as an opportunity to save on commissions and increase their net proceeds. This mismatch in expectations is likely to create more complex negotiations moving forward.

What This Means for Sellers

While these changes present challenges, they also provide opportunities for sellers to take more control over their costs.

Pros:

• More Control Over Costs: Sellers can now manage their expenses more carefully by negotiating their own agent’s commission and not automatically contributing to the buyer’s agent fees.
• Transparency: With clearer roles and responsibilities, negotiations around commissions become more straightforward.
• Innovative Solutions: Platforms like VELfixi.com offer flat-fee or reduced-cost services, allowing sellers to save on commissions while still accessing the professional support they need.

Cons:

• Reduced Buyer Pool: Some buyers, particularly first-time buyers, may struggle to cover their agent’s fees, which could reduce the number of offers on a home if a seller does not offer any help with closing costs.
• Pricing Pressure: Sellers may feel the need to lower their asking prices to help buyers afford both the home and their agent’s commission, potentially reducing overall profits.

Strategies for Success

To navigate these changes, sellers can:

1. Stay Informed: Knowledge is key. Stay up-to-date on changes in commission rules and consult with your agent about how these shifts may affect your sale
2. Adapt Pricing Strategies: Be flexible in your pricing. Consider adjusting your asking price or offering other incentives like covering some buyer closing costs
3. Leverage VELfixi.com: Use innovative platforms like VELfixi.com to reduce your own costs. By saving on listing fees through flat-rate services, sellers can keep more of their profits and remain competitive in the market. VELfixi.com m offers various tools, including MLS listings and targeted ad campaigns, to help sellers achieve their goals without breaking the bank.

Conclusion

The evolving real estate market may feel uncertain, but it also opens the door for new strategies and solutions. By understanding the changing dynamics, sellers can take proactive steps to adapt and succeed.

Platforms like VELfixi.com offer cost-effective alternatives to traditional real estate models, empowering sellers to save money while still getting expert support. Staying informed and flexible will help sellers navigate this new landscape and achieve their desired results.