So how is the Buyer's agent going to do come July?

Question

I have a good friend who is getting ready to list his house. He's not in a big hurry. but I'm wondering what happens when the July 1st ruling kicks in?

Will the typical buyer be taken by surprise when they ask to be shown a house?

Will buyer's agents ask for a signed contract and/or a retainer?

Will buyer's agents just fade away and seller's agents handle everything?

Overall, how do y'all think this affects someone selling a house (it's in San Diego County)? Would you try and get it sold before July 1, or does it matter?

Bradley Buxton · Answer

@Bruce Woodruff

The new rules will force more conversations about compensation and a longer interview process with agents having to show value. When a buyer has to sign something they will be more careful in who they chose to represent them. Buyer agents will reduce in number because many offer the same services. If the NAR was worth anything they would have a campaign education the benefits of the buyer agent. Just like you can fix your own car and YouTube your way through it's not for everyone. At my brokerage we are innovation with AI chatbot, data portals and integration of technology to add value to the way people search and sell homes. Pros will continue to be pros and the some wont make the cut.

Victor Patel · Answer

I have 20 years of experience with selling multi-family property with 5 plus units and more.  These properties were sold without listing them on the MLS.  The listings were either sent directly to me and other commercial brokers via email mail or listed on LoopNet.  There was never a mention of a co-op fee for the buyer agent.

We tackled this by including the buyer agent commission in the offer contract.  It never was an issue as the seller and his/her agent knew before accepting the contract that the buyer agent fee of X% was included in the purchase price.  I never had a buyer's contract.  The buyer either trusted or they didn't.  Most became repeat buyers.

This is different from the residential side for many agents and a little scary...rightfully so.  I think if the agent sticks with it, it really doesn't change anything substantially.

Keep at it agents!

FYI:  I do believe the NAR caved into the DOJ.

Russell Brazil · Answer

Virtually no changes.

Do you think buyers agents don't exist in the 19 states that already requieed buyer agency agreements?

Jamel JR Smith · Answer

I love your response.  It is so accurate and on-point almost as if no one knows how buyer agency actually began.  Also, that when it first became a "thing" you had to take a certification class to become a Certified Buyers Agent thru NAR.  This is really just defining who is actually representing who and should you be representing a buyer you have to fully disclose it (and quite possibly still write your commission into the deal as was done before anyhow).  It also still ultimately doesn't change the fact that the list price is only higher because the commission is included in it and the buyer is realistically paying for it (over 30 years) anyhow although it reflects on the sellers side of the CD.

Lynn McGeein · Answer

@Bruce Woodruff no one seems to remember that buyer’s agents developed because agents used to always represent the seller, even when they showed buyers houses, causing many misunderstandings.  The total listing fee was always split between both firms then, too, when both listing and selling firms represented the seller.  Listing firms will likely have to keep their listing fee the same total it is now, anyway, in order to cover the firm if another agent from their firm shows and sells the home as a disclosed seller’s representative showing the home, because the listing agreement is with the firm, not the individual agent. Many listing agents won’t handle the buyer of their own listing because it is too easy for a buyer to assert they were misled or didn’t fully grasp that the listing agent represented only the seller.  If they do handle an unrepresented buyer, no other agent involved, the listing agent will likely have the extra charge in their listing agreement already to cover the additional work and risk.  As all these problems arise again, it will likely swing back to sellers understanding that it’s going to cost them just as much for the firm to represent them in the event of an unrepresented buyer as it would if they just paid a buyer agent fee, but they’re more protected from future litigation if the buyer has their own representation vs claiming they were misled by a seller or seller’s agent.  Should be fun watching it play out.

Jack Seiden · Answer

Yes, all of the above, some people will continue to pay for a full service agent, some people will pay for a discount, some people will forgo agents all together, I think we will see alot more variation then we currently see, but just like any other business there will be tiers, Ritz, Marriott, Courtyard, Fairfield inn but for agents.

Sam Shueh · Answer

Buyer contract gets longer. In your area the listing agent should offer same as before to a buyer agent other than MLS no longer lists coop commission. Buyer agent finds out him self.

I think once it gets going it is same as before.

Jamel JR Smith · Answer

Many agents did not and still don't understand the difference when it comes to representing a Seller as a Sellers agent.  If you don't get a signed contract from the buyer stating that you are representing them and their interests in purchasing (typically with an agreed amount/percentage of compensation) then you are representing whoever the seller is of said property that the buyer is purchasing.

Without an agreement: the Buyer is your customer and the seller becomes your client because they are the one paying the commission.  With an agreement: the Buyer is your client and the seller is the client of the listing agent , hence they do not technically owe you a commission.

It is and always has been pretty clear by law and NAR regulations.  Lots of agents however have misunderstood the "Law of Agency" and disclosure which is why this problem exists now.

For those that have always represented properly: there will be no issues because they will continue to follow what they should've learned when taking their classes, passing state exams, and in their "30-day orientation".

The others: will fall off from confusion.

Just Saying...............

Jamel JR Smith · Answer

"Caved"?  They ran up the mountain and just jumped down. LOL

So how is the Buyer's agent going to do come July?

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