Did you know that 89% of home buyers use a real estate agent or broker to purchase their home? That is up from 69% in 2001.
Alleviating the stress of the process on your own is a major reason why having an expert at your side is worth it.
As of Saturday, August 17, 2024, the National Association of Realtors (NAR) changed the home-buying process, adding that a Buyer Representation Agreement (Buyer Broker Agreement) must be in place, formalizing the contract between the agent and the buyer.
The new format aims to create a more transparent and professional relationship between buyers and their real estate agents, especially for those 32% of the buyers preparing to make their first home purchase.
Previously, a buyer could contact any Realtor to see homes anytime. Now, those Realtors will need to be formally hired, likely through an interview process, and likely based on their qualifications and the buyer’s specific needs.
Ron Shuffield.
“While (the) ‘topic du jour’ has certainly created a lot of moving parts, our people are beginning to adjust to the necessary changes we’re having to make in how we interact with our buyers and sellers, as well as with our fellow Realtors,” said Ron Shuffield, President of Berkshire Hathaway HomeServices EWM Realty headquartered in Coral Gables, with a large Key Biscayne office where close to 100 agents work.
Buyers are formalizing their working relationship with their agent by signing a Buyer Broker Agreement. They should feel more secure knowing their agent or broker works in their best interest.
Sellers, meanwhile, can continue to offer compensation to buyer’s agents if they believe that strategy will lead to the best outcome for the sale of their property. Commissions have always been negotiable.
Shuffield took time out of his hectic day this past week to answer five Islander News questions regarding the format change.
1. Does the new rule delay a sale or a buyer’s interest in a property if an agent doesn’t have a Buyer Broker Agreement in place at the ready?
A: With the close focus our industry has had on being prepared for the August 17th implementation of our new requirements, most Realtor/Brokers have been preparing their agents for the past several weeks. Therefore, I don’t expect any delays associated with the closing of pending purchase and sale transactions.
While the Realtor community is ready today to execute a Buyer Broker Agreement (BBA) with any home buyer, we realize it will take a few weeks for buyers to familiarize themselves with this new step in purchasing a home. However, we believe buyers will quickly adapt to this new requirement to enter into a contractual agreement with a real estate professional.
2. What is a Buyer Broker Agreement, and how did a sale of a home work previously?
A: As of August 17, Realtors are required to have an exclusive Buyer Broker Agreement (BBA) with any home buyer to whom they are delivering professional services as a real estate broker. This agreement, between the Realtor/Broker or Agent and a home buyer, is similar to other contractual agreements, whereby the formal agreement spells out what services the broker will provide and what the buyer will pay for those services.
Again, like other agreements, the BBA will have a specified term of engagement for the broker to assist the buyer in their search for a home. This specified term in the agreement will assure the broker of being compensated for their services if the buyer purchases a property during the term of the BBA.
3. Is all this being done to protect the buyer? How about the seller?
A: The new NAR rules prompting these changes are designed to provide greater transparency in residential real estate transactions for both buyer and seller. All parties should always know what their respective broker will be paid and who will be responsible for making that payment prior to entering into a contract to purchase or sell their home.
4. Will the buyer pay the Realtor more than the standard fee, and has that always been like 6% of the selling price?
A: There has never been a standard real estate fee. As they have always been free to do, brokers will set fees based on their level of service and other market conditions.
5. What have you told your buying and selling team to prepare for this day?
A: Our associates are accustomed to adapting to change. Those changes have ranged from economic slowdowns to, more recently, the COVID-19 pandemic. Real estate brokers and agents adapt and pivot to meet the challenges and opportunities of the times.
Real estate consumers, both buyers and sellers, will want to continue to turn to real estate professionals for their expertise in helping them navigate what, for many home buyers, is the largest transaction they will ever undertake.
We have told our associates to be well prepared to explain the revisions made to our representation of buyers and sellers and to provide a complete presentation of the professional services they will provide to their future buyers and sellers.