Buyer Compemsation

As required by the recent National Association of Realtors Settlement Agreement, starting August 17th, 2024, all real estate brokers providing brokerage services to a buyer will be required to have the buyer execute an Exclusive Buyer Brokerage Agreement before touring any homes.

Buyers should know that after Aug. 17:

·      If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided and for how much.

·      Written agreements are required for both in-person and live virtual home tours.

·      You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.

·      Agent compensation for home buyers and sellers continues to be fully negotiable.

An Exclusive Buyer Brokerage Agreement is a contract between a real estate broker and a potential homebuyer. Florida has 4 different variations of the Agreement. The Agreements differ by the type of representation provided by the Broker, including single agent, transaction broker, single agent with consent to transition to transaction broker, and no brokerage relationship. Under each Agreement, the buyer commits to working exclusively with the Broker in their search for a property in exchange for a commission paid by the buyer to the Broker, with certain caveats. In return, the Broker agrees to represent the buyer’s interests, providing professional advice, market insights, and negotiation skills to secure a contract for the buyer.

Florida’s Exclusive Buyer Agreements:

• Exclusive Buyer Brokerage Agreement–single agency:

This agreement may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, single agency representation with a buyer and provides for a retainer fee.

• Exclusive Buyer Brokerage Agreement–transaction agency: This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, transaction agency representation with a buyer and provides for a retainer fee.
• Exclusive Buyer Brokerage Agreement–no brokerage relationship:

This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, no brokerage agency representation with a buyer and provides for a retainer fee.

• Exclusive Buyer Brokerage Agreement–transition from single agency to transaction agency: This form may be used when a broker wishes to act as a buyer’s agent and be paid commission by the buyer. It establishes an exclusive, single agency representation with a buyer and provides for a retainer fee, with a right to transition into transaction agency.
• Showing Agreement (SA-3x): This form may be used to create a buyer’s commission agreement based on a one-time showing of property.

The form of representation a buyer or seller selects will bind the entire brokerage and not just an agent/licensee working at the firm. A buyer wanting single agent representation binds the entire brokerage to a single agent relationship.

Florida does not permit dual agency so if there is a home listed by the same firm, the single agent would have to slide back, with your consent, to being a transaction broker.

Many brokerage firms do not permit single agent representation as a company policy for several reasons. The possibility of selling “in-house” properties is hampered if single agency is utilized to any extent. Less talked about and a more significant reason why larger brokerages only all transaction brokerage is the fact that higher levels of service require a higher level of knowledge by all agents in their firm. The lack of experience is a source of higher liability to the brokerage.

Florida Statute Regarding Brokerage Relationships

Filed under: 2024 real estate, Blog, Boca Raton real estate, Buyer Compemsation, CEBA, EBA, Exclusive Buyer Agency, Florida Buyer Agent, Florida Exclusive Buyer Agent, Florida Real Estate, Home Buyer Advice, Home Buyers, Homebuyer Advice, NAR, NAR Legislation, Real Estate, real estate news, South Florida Real Estate by Kim Bregman
Comments Off on NAR August 17th Deadline. What Florida Buyers Need to Know.

The Department of Justice, in its regulatory capacity, has recently intervened to reshape commission structures, a move that will trigger a multitude of changes, especially for home buyers.

The National Association of Realtors ( NAR) settlement has not yet been accepted. It is proposed to go into effect at the end of June to mid-July.

The results of the NAR Settlement means that:

1.    NAR owned multiple listing services ( MLS) are prohibited from sharing offers of compensation to Buyers.

2.   MLS members are required to enter into written agreements with the buyers disclosing how they will be paid and by whom before showing a property.

What are Multiple Listing Services (MLS)? They are database platforms that agents and brokers pay to subscribe to. The agents and brokers use it to share information about properties for sale. Subscribers agree to rules about cooperating with and compensating all brokers who subscribe to it. If you are seeing listings on other sites (like Zillow), chances are, those sites are getting a feed from their local MLS.

Since the beginning of buyer agency, the buyer broker’s commission has been built into the sale price of the property. The buyer paid for the house and the seller paid outstanding bills, then collected their profit. Responsible seller’s brokers used a form called a “net sheet” to show sellers what their final profit was. Broker fees were deducted from the sale price along with taxes, water bills, or other costs of the sale.

The MLS system built commissions into the price. The seller, through their broker, published their offered commission to buyer’s broker on the MLS.

If the settlement is accepted and all offers of compensation are removed from the MLS system, we need ways that buyers can continue to pay our fees without undo burden.

1.   Include the Buyer Broker Fee in the Offer and request that it be included in the Sales price. This creates a way that the buyer broker commission is paid for in a mortgage, as part of the house purchase. Functionally, this is exactly the same as it has been. The buyer pays for the house, and the buyer’s broker fee is subtracted from the seller’s profit at closing.

2.   Lenders are seeking ways to create financing options for buyers, so that they can finance the buyer broker commission, if it is not included in the sale price.

3.   Buyers to pay the Buyer Broker fee outside of Closing or as a disbursement at Closing, though not reflected in the sales price. This is de minimis for cash Buyer but requires that a Buyer getting a loan have more cash to close.

Home Buyers will no longer have representation costs built into the real estate transaction when a property is listed through the MLS system and represents a property for sale by a licensed real estate agent, but Sellers will.

Buyers or their agents will have to approach Seller and ask permission to include the cost of representation within the transaction. Sellers have all the power to withhold their permission for the Buyer to do so. Seller’s representation costs, however, will continue to be included in the transaction, using the Buyer’s funds to pay for them.

Every Buyer will be obligated to sign an Exclusive Buyer Agreement in advance of being shown homes that specifies payment terms when seeing a home that is listed by a real estate agent, EVEN IF THE REAL ESTATE AGENT SHOWING THE HOME IS THE LISTING AGENT. THIS IS DUAL AGENCY!

Payment can be made directly by the buyer outside of the transaction, included in an offer to the seller requesting a credit to cover the expense, or through a commission offered by the listing agent. However, commissions won’t be advertised as part of the transaction on the Multiple Listing. Fee arrangements with the client may include an hourly fee, a lump sum fee, or a percentage-based commission.

This is a particular disservice to homebuyers requiring a loan. Buyers will have to pay their own agent out of pocket, on top of a down payment and other closing costs. Finding thousands of dollars to pay an agent could be a challenge, especially for first-time buyers, who typically have limited funds and also the greatest need for an agent’s guidance. VA Loans currently prohit paying a Buyers Agent directly by the Buyer.

The trickle effect resulting from this barrier to entry for first time homebuyers or move up home buyers will likely affect the economy negatively in the near term. Home buying and construction drives jobs, manufacturing, retail and more.

Removing the buyer’s representation cost from the transaction but leaving the seller’s representation cost in is extremely one sided and unfair.

Florida has more real estate agents than any state in the US and over 99.9% of agents in Florida are transactional agents who don’t represent the buyer or seller in a fiduciary capacity. According to Florida statutes, unless an agent establishes a single agent or no brokerage relationship with a customer in writing, they are by default considered transaction brokers.

The Florida Legislature some time back rewrote a law to say that if you’re a fiduciary agent, you have to disclose that, but if you’re transactional broker, you don’t have to. Why is transactional brokerage so attractive to the agents? It is because you don’t have the legal liability, you don’t have the responsibility that a fiduciary agent has.”

Optima Properties is a member of the National Association of Exclusive Buyer Agents

(NAEBA.org) and never represent Sellers. Optima Properties does not list or sell houses and never practice Dual agency. Optima Properties will never ask homebuyers (clients) to sign a “consent form” asking them to switch to another “Designated Buyers Agent or Dual Agent” within the team or same real estate brokerage in the middle of a real estate transaction because the buyer is interested in making an offer on one of their company’s real estate listings.

Click Here for a list of

“100 Services Provided to Home Buyers”

by Optima Properties

Filed under: 2022 Real Estate, 2024 real estate, Blog, Boca Raton real estate, Buyer Compemsation, closing costs, contracts, Exclusive Buyer Agency, Exclusive Buyer Agent, First Time Homebuyers, Florida Real Estate, Home Buyer Advice, Home Buyers, Home Financing, Homebuyer Advice, House Closings, Mortgage Information, NAR, NAR Legislation, new home construction, Real Estate, Real Estate Closings, Real Estate Investment, real estate news, Real estate trends, Seller Financing, South Florida Real Estate, yer by Kim Bregman
Comments Off on What Recent NAR Settlement Means for Home Buyers