August 17, 2024 started a new chapter in the Real Estate industry. A plaintiff’s attorney convinced a jury that it was wrong that a seller pays the buyers agent’s commissions on the sale of their property and that the buyer should be paying these commissions. This does not prevent the seller from paying the buyer’s agents commission, it simply states that they can no longer be required to. In my opinion, the seller is not going to make any more as they simply will be lowering the price so why even bother? Anyway, not my battle to fight…I just have to learn how to operate under the new rules.
What I am seeing on the lake is that listing agents are still convincing sellers that it is to their advantage to include money in the deal for the buyer’s agent. If/when sellers stop doing this, the buyers agent commission will be another point of negotiation in a deal.
The worst part of this new rule is that buyers now have to sign a buyers agent agreement BEFORE an agent is allowed to show a house. This is uncomfortable for new buyers in the marketplace as it feels like you are locking into an agent before you know who you are dealing with. What most agents are doing in this case is to sign an agreement that expires and the end of the showing or showing. So the agreement may be just for the one house someone is wanting to see or for the day and will cover all houses seen that day. Once a prospective buyer gets comfortable with the agent, they may sign something that extends until the buyer finds a house. And the agreement, it will define services the agent offers and what is charged for the services. It can get weird here as this agreement can look like a buyer will have to pay commissions (eg 3%) out of pocket, on top of the down payment paid on the house. In reality what typically happens is the buyer’s agent commissions are being paid by: 1) the seller through the listing agreement or concessions or 2) negotiated as part of the final price. I have not yet seen a buyer have to come out of pocket to pay their agent.
We have not seen the end of this and I think it will take some time (and a couple of lawsuits) to smooth out the process that becomes the standard operating procedure.
Please reach out to me if you have more questions about this topic or property on Smith Lake. I can be reached at 205.492.3211 or Jeff@SmithLakeRentals.com.