Should you hire a buyer’s agent?
Full disclosure: Buyer’s View strongly supports the hiring of a buyer’s agent in your housing search. Choosing a professional buyer’s agent to represent you is one of the best decisions you can make. The buyer’s agent you choose has a fiduciary (legal) responsibility to represent you and help guide you through the home buying process. You are their client. They are not salespeople and have no connection with the homeowners. They should be offering you professional advice and always keep your best interest in mind above all others including their own.
Buyer’s View is not a real estate company. What we do is offer a unique and better way for future homebuyers and homeowners to choose which professional they would prefer to work with by reviewing their business and personal profile on our website. Profiles of buyer agents and listing agents are posted from numerous real estate companies in the cities and towns throughout New Hampshire. We offer various real estate niche categories where these agents have experience and training in those selected fields. You will be able to choose a buyer’s agent in anyone of these niche categories to represent you in the area that is appropriate for your real estate needs.
Major changes that will be effective August 17, 2024
This may seem a little lengthy, but we feel it is extremely important for you to know the major change the real estate industry will be experiencing is effective August 17, 2024, regarding buying and selling of residential properties. The National Association of REALTORS (NAR) has seen antitrust lawsuits against them from the Department of Justice (DOJ) and from private attorneys. The catalyst for the major changes about to take place is from the results of a class-action lawsuit in the state of Missouri in October 2023 and referred to as the Sitzer/Burnett case. This landmark case was about home sale commissions and offers of compensation to buyer agents. The plaintiffs were home sellers in the state of Missouri that used an agent who listed their home in one of four MLSs in the state of Missouri going back to October 31, 2019. The defendants were NAR and several other major real estate companies. A jury trial reached a guilty verdict against the defendants and a settlement was negotiated. To give you an idea of the magnitude of the settlement, NAR has agreed to pay $418 million in damages. Some of the other companies that have settled are listed with the damages they have agreed to pay:
- Berkshire Hathaway $250 Million
- RE-MAX $55 Million
- Keller Williams $70 Million
- Compass $55 Million
- Anywhere Realty $83.5 Million
Anywhere has several major real estate companies under their umbrella. (Better Homes & Gardens, Century 21, Coldwell Banker, ERA, Sotheby’s International and Corcoran real estate)
How real estate transactions normally took place prior to August 17, 2024 date
The MLS (multiple listing service) would post the buyer agent compensation for each individual listing. The buyer agent compensation offer was paid for by the listing agency and agreed to by the seller. The settlement agreement now forbids this compensation to be posted publicly in the MLS. Even though it can no longer be publicly displayed in the MLS, there is nothing in federal law that prohibits sellers or the listing agency from paying the buyer’s agent fees.
What are some of the new changes?
Under the new NAR settlement agreement if you hire a buyer’s agent you will be required to sign a written buyer agreement with that agent before you tour any properties. This agreement will spell out the services to be provided, the terms of the agreement, and how any compensation to the buyer agent will be paid and the amount of that compensation.
Will homebuyers be required to pay their buyer agent fee?
Nowhere in the final agreement does it say the homebuyer must pay their buyer agent fee. We understand what value professional listing agents bring to the seller. Why doesn’t anyone believe what value the buyer agent brings to the seller? The industry needs to ask itself doesn’t the buyer agent bring as much if not more value to the seller with a homebuyer ready, willing, and able to purchase their property? Isn’t that value to the seller worth them considering paying the buyer agent fees? When a homebuyer is purchasing a property aren’t they indirectly paying the listing agent fees?
How buyer agent compensation can be addressed and still be complying with the new regulations.
The buyer’s agent has the right to include language in the purchase and sales agreement that states the seller will pay the buyer agent fee of (“X”) at the time of closing or ask the seller to credit the buyer (X) at the time of closing. The (“X”) amount is negotiable just like any other part of the purchase and sales agreement.
If the seller refuses and strikes the (“X”) verbiage from the purchase and sales agreement there is still another option. The buyer’s agent can request the listing agency pay the buyer agent fee of (“X”). The (X) amount would come from the total fees the listing agency is charging the seller. This would require a separate agreement between the two agencies because they are not principles of the purchase and sales agreement. The seller and buyer should both approve and sign off on this separate agreement between the agencies. This will provide total transparency and no misunderstanding of who is paying the buyer agent fees and how they are being disseminated. This (X) amount is also negotiable between the two agencies. There shouldn’t be any reluctance from the listing agency because it is in the seller’s best interests to complete the transaction. Also, it could possibly be a violation of the Code of Ethics if they did not cooperate with another REALTOR.
If the seller is willing to sign off on the negotiations between agencies and the listing agency refuses to cooperate, it could possibly be a breach of the listing agency’s duty of obedience regarding their fiduciary/legal duties. Which means follow your client’s instructions and act in their best interest. The agent can give their best advice to the client but they are not authorized to think or decide for the client.
How does a buyer’s agent know if a property offers a buyer agent cooperation?
When planning to show a property the buyer’s agent can ask if buyer agent cooperation is being offered. The buyer’s agent should not ask the percentage or the dollar amount. The amount of compensation or lack thereof should never be a valid reason for not showing property to your client.
Can the buyer agent be present when the listing agent presents the Purchase and Sales agreement to the seller?
Yes, the buyer’s agent has the right to be present with the listing agent when the listing agent presents the homebuyers purchase and sales agreement to the seller. The buyer’s agent can answer any questions the seller may ask about the homebuyer or the transaction from the homebuyer’s view. The can also be ready to defend their position if the seller should ask “why should I pay your fees”? They do not have the right to be there during negotiations the listing agent has with the seller and must leave. They should remain in their car and call the client and tell them you are waiting for a response from the listing agent. If any negotiations need to take place, the can start immediately.
A brief overview of The National Association of REALTORS (NAR)
Buyer’s View thinks it will be helpful and more transparent if you have more knowledge of NAR and what they stand for.
NAR is America’s largest trade association representing 1.5 million members. REALTOR is a registered membership mark that identifies a real estate professional who is a member of NAR. The National Association of REALTORS subscribes to a strict Code of Ethics. Not all real estate agents are REALTORS. The Code ensures that consumers are served by requiring REALTORS to cooperate with each other in furthering their client’s best interest. When you hire a REALTOR that agent you choose has a fiduciary (legal) responsibility to represent you. They should be offering you professional advice and always keep your best interest in mind above all others including their own.
What’s the difference between a seller’s agent and buyer’s agent?
Both agents bring value to their clients, but they have opposite goals.
Seller’s Agent
A selling/listing agent is an advisor/consultant to the homeowner/seller.
The homeowner/seller is their client.
They are salespeople to the homebuyer.
They try to get the highest possible price with the most favorable terms for the homeowner/seller.
It is not their responsibility to point out any flaws with the
house, or any potential problems in the neighborhood.
If the homebuyer asked them a question it is their duty to answer the question honestly, but they are not required to volunteer anything else.
They cannot make any other negative comments about the house or the quality of the school system.
Buyer’s Agent
Buyer agents are just the opposite.
The homebuyer is their client.
They are advisors/consultants to the homebuyer.
They are not salespeople.
They have no connection with the homeowner/seller.
They will point out any flaws in the property that are obvious, but they are not home inspectors.
They will volunteer any information about the integrity of the neighborhood or the quality of the school system.
They will help you determine what is the fair market value for the property.
They will always keep your best interest in mind above all others including their own.
They are skilled in negotiating and can help the homebuyer obtain the best price and terms for a property.
They can help find properties not listed in the MLS.
Summary
There must be a clear voice and leader describing how these changes can take place without all the confusion and questions planted regarding buyer agent fees. We understand that many future homebuyers are struggling to raise a down payment and closing costs. They are not able to pay or should they be responsible to pay buyer agent fees, as presently structured, in our opinion. Charging these fees would greatly affect the underserved homebuyers and deny them the American dream of owning their own home. Charging these fees to the homebuyer could also prevent them from obtaining a loan they would normally receive approval for. The real estate industry should be able to offer fair and equal representation to all parties in the buying and selling process. Both the seller and homebuyer will be better served if they are represented by a professional real estate agent. We believe a homebuyer should be able to find a buyer agent that has enough confidence in their ability to be compensated by the seller or the listing agency and not their client.
What is the future of the real estate industry?
Our vision is the Buyer’s View website will allow some homeowners, that may be thinking of selling to take a more proactive role, to find a potential homebuyer on their own without hiring a listing agency or putting their property in the MLS. Instead, they would hire a real estate advisor/consultant to help them determine fair market value for their property, perform various ministerial acts, and help them negotiate any purchase and sales agreement from a buyer’s agent. This advisor/consultant would charge the homeowner an hourly fee like other professionals conduct their business. These hourly fees would be earned whether the transaction was consummated or not. In some cases, there may be an opportunity to negotiate an hourly fee plus a “success fee” if the transaction closes. The amount of the “success fee” being negotiable. Some sellers will like this alternative because they choose not to enter their home into the MLS for numerous reasons. This could be a new opportunity for the real estate advisor/consultant to obtain a future selling prospect and a potential homebuyer client.
For those homeowners who want to list their property in the MLS with a real estate agency, a homebuyer can be found much quicker and easier by their agent than waiting for the buyer to find them. However, the homeowner chooses to sell their house, it’s not one way or the other which is best, it’s giving the consumer more choices.
Disclaimer: The statements and comments above are solely the opinion of Bob McAvoy, founder of Buyer’s View, and should not be used as any type of legal advice. Also, they are not meant to conflict with any existing guidelines of an agent’s managing broker which they must follow.
Who is Robert “Bob” McAvoy?
Founder, Buyer’s View
Bob was an original Charter Member of the Salem, NH Board of REALTORS. In 1989, he and his staff boldly decided to become an exclusive buyer agency office-unheard of back then; an exclusive buyer’s agency means only homebuyers were represented, no homes were listed for sale. His two offices quickly became one of the largest buyer agencies in NH to exclusively represent the homebuyer. Bob was then recognized as one of the leading experts in buyer agency. During his time on the Salem Executive Board, he helped introduce buyer agency to the Salem Board that was still operating on a sub agent business model.
Although Bob retired some years ago, he was continuously bothered by the current seller dominated MLS system and the one-sided approach to the market. The real estate portals and the MLS do not treat the homebuyer fairly. He has come out of retirement to launch the Buyer’s View platform and website. Buyer’s View will now create a more level playing field with the seller. The seller now has a pool of available buyers to approach in their local market which can significantly reduce the advertising cost for their listing agent and help homes sell more quickly. The Buyer Agent will now have a vehicle to expose their clients home buying needs for everyone to see and a much stronger hand in negotiating commissions and prices. Moreover, the seller and their agent can now take a more proactive role in helping to sell their property by being able to target these buyers. The Buyer’s View market approach is a win-win for Buyers, Sellers, and their license agents.