buckle up big changes are coming to the real estate industry on August 17th the way realtor commissions are going to be paid is going to be changing as of August 17th and now buyers are going to be on the hook for having to pay their real estate agents in this video I'm going to explain to you what those changes are how it's going to affect the buyers and how you should be navigating this and I'm getting a lot of questions about this I had to do a video about it for those of you who just
hate unreal estate agents can do me a favor please be kind I'm just giving out information I know you all are hating on us right now please don't hate on me I'm just a messenger I'm just trying to pass on information to educate people okay thanks back in March the National Association of Realtors reached a settlement with the two cases you may recall me talking about this before there was a case that was filed that was called the sitzer Bernett case and the Merl case so in March the National Association Realtors they settled to the
tune of $418 million and they agreed to make changes in the way the real estate commissions are structured so that lawsuit basically said that it was unfair for sellers to be paying the commission not only to their listing agent but also to the buyer's agent now they're making it where each party is responsible to compensate their own agent so the way it currently works now and it's been working for like the past I don't know how many years now for a very long time is that say the seller is going to list her house with
a listing agent a real estate company and then they chose to pay 5% on average 5% sometimes 6% and then what happens is the agent the buyer's agent who brings the buyer to purchase the home that commission is then split between the listing agent and the buyer's agent so two and a half to the listing agent two and a half to the buyer's agent so now that is going away a seller can choose not to offer any buyer agent compensation they can choose to only pay their listing agent then leaving it up to the buyer
to pay for the services of their buyer's agent now a seller can still choose to offer buyer agent compensation so it doesn't mean it's completely out that you know you you can't offer any compensation at all you can choose to and it doesn't have to be 2 and a half% it doesn't have to be 2% it could be whatever you want but you can also choose to offer zero to that buyer's agent this has thrown so many home buyers into a panic because it's expensive as it is to buy a home like you have to
save your down payment your closing cost now you have to have money set aside to potentially pay for your real estate agent it's a lot I get it so if you're looking to buy home after August 17th here are some changes that buyers need to be aware of and how you should navigate this as of August 17th it's going to be a law you are required to have a signed buyer agency agreement with your real estate agent now in that agreement it's going to have whatever fee you and and that real estate agent come up
with as to what that agent will be paid now what will that fee look like that agent can decide to do just a flat fee or they could do a percentage like they what what they've gotten in the past 2% 2 and a half% of the sale price now this is going to be something you're going to be negotiating with the real estate agent if you are in need of a real estate agent you want to hire a buyer's agent I recommend interviewing three Realtors ask them questions what kind of services are they going to
provide ask what the fees are going to be now now that part is going to be important so if an agent's saying oh you know pay me a flat fee of $2,000 or $30,000 whatever what are you getting with that flat fee is that agent just going to be opening doors for you and letting you in the property or are they going to maybe write a contract for you and then you're on your own are they going to be a full service agent are they going to take you to properties show you the properties write
the offer negotiate the offer handling the home inspection negotiations with the listing agent doing all the things that we all do on a regular basis when working with our buyers so it's very important that you understand exactly what that agent's going to be doing for you there are two companies right now that I'm aware of I've talked about before there's a company in California called AV viiva and a company in Miami called bcom and they are a real estate company but their agents are flat fee agents they charge like a few thousand to several thousand
do and all they'll do is they'll open the door they'll get you into properties and in some cases they'll write the contract for you but then after that they step out they don't get involved in negotiations or anything else that goes on with that transaction be careful remember you get what you pay for if you're going to be working with a flat fee agent you're going to be on your own for a lot of that now getting back to these buyer agency agreements now the agreements can be you know three months long 6 months long
it's whatever you and your agent agree to however long you want that contract to be now I've been asked this question what if I just want to see one property I don't have a real estate agent you can call a real estate agent if you want to see a property and you can sign an agreement for just that one day for that one showing so they can get you in to show you the property is not forcing you to commit to work with that agent you can have this one day agreement to see the property
and hey it's like a trial run if you like the person then maybe you want to consider entering in a longer term agreement with them now what about open houses I'm getting this question a lot people are hearing that you can't go visit an open house if you don't have an agent representing you and you don't have a signed buyer agency agreement that is not true you can go visit an open house but you need to understand that there's going to be a lot of information at that open house explaining that the the agent hosting
that openhouse is representing the seller so here's an example here in New Jersey all of these new rules are going into effect August 1st so starting August 1st you walk into an open house in New Jersey you're going to see a sign posted we actually now have to post signs explaining who the agent is representing so here's the example it says here attention prospective purchasers please read this sign carefully this is to advise you that the agent who is conducting this openhouse represents the seller and is required by law to promote the interest of the
seller any information you give this agent is not considered confidential under New Jersey Law and could be disclosed to the seller of this property you as the buyer are entitled to have someone represent you as a buyer's agent if you are interested in this property the duties of a buyer's agent include helping you evaluate the property prepare an offer on the property and negotiate in your best interest if you as the buyer are already exclusively represented by a buyer's agent you are required to disclose this representation on the signin sheet if you as the buyer
are not already exclusively represented by a buyer's agent please be advised that the openhouse agent is not precluded from being a disclosed dual agent or designated agent and can enter into any relationship with you as explained in the consumer information statement yes this is going to be posted at every open apps now here in New Jersey so it's basically saying that they are representing the seller and you as a buyer you must disclose if you are working with an agent so you're probably familiar with those signin sheets when you go into an open house so
you just need to put down your agent's name do you need to show an agreement no you don't need need to show an agreement you just need to give the name of the agent that you're working with another big change that came from the nor settlement is that the buyer agent compensation can no longer be displayed on the public multiple listing service and you're thinking so what's the big deal this is a big deal hear me out so right now when you go to look up a listing for us agents when we look at a
listing we can see what the buyer agent compensation payout is so it's either 2 and a half% 2% even less in some cases right now we are seeing it now and the reason why they agreed to remove that information off of MLS is to prevent the agents from steering their clients away from a property from seeing a property that was say offering much less buyer agent compensation or not offering any compensation like I can totally see why that they agreed to this and why they did this because if you had followed that trial I followed
the trial a little bit and at one point in the trial they played phone recordings of real estate agents contacting a listing agent about a property and when the question came up the buyers's agents asked what's the commission and the listing agent said oh he's offering zero he's not offering any buyer agent compensation those Buyer Agents were like oh I'm not going to show the house then they literally said on the phone I'm not going to show my client then my God oh my God now look in my career I have heard this happen too
over like from Agents where yeah yeah they won't show a property if they weren't offering at least the 2 and a half or 2% would do it now to me that's bad that's just bad and I get it look we all work hard as real estate agents especially working with buyers I totally understand that but we're here to serve as a client okay and if you're keeping them from seeing a property because you're not being paid or you know you're not being paid like whatever what you're used to getting paid say two and a half
2% you're doing them a complete disservice and I know agents are probably screaming at their TV right now that I'm like I'm even saying this but we all got to do the right thing by our clients and thank God a lot of agents are leaving this business right now because they got into this in 2021 thinking this is easy money and I'm sorry I mean here in New Jersey we've already lost like 6,000 agents in the state we have and people are bailing I think because of this whole settlement thing but we got into this
to help people we are helping people navigate the largest financial transaction of their lives so when that steering was happening you're just hurting you're not doing right by your clients you're just hurting them by doing that by keeping them from seeing that property so I like this I like that they're doing this there are some agents that are arguing like what you know this isn't they're talking about transparency we need to be more transparent it should be on the multiple listing service I see that side too but after hearing those recorded phone conversations at the
trial of what these agents saying no I'm not showing that property oh my God I I can't I can't believe that this is what gives real estate agents A Bad Name I'm sorry we got to do better so to me this is a positive change is to prevent Agents from steering people away from a property they want to save because they're not getting paid or paid enough on that transaction so now let's talk about what does happen if you find house and you find out that the seller is not offering to pay your real estate
agent okay let's not panic what you could do is when you write the offer you could ask the seller to help pay those fees towards your agent now you can ask for the full amount whatever your agreement is with your agent what that fee is or you can ask to maybe split it pay half you can ask them to do that now if it's zero they're saying no then that's where you unfortunately you are going to have to come up with the money to pay your agent now a theory that I have and this is
a theory and now I'm not trying to make people angry about what I'm about to say but what I think could potentially happen if the seller is offering zero compensation what I think may end up happening is that the buyer is going to offer less the list price less the the amount that they have to pay their buyer agent I just have that feeling that's what's going to happen because let's face it it's expensive you know the buyers have to save up all this money your down payment your closing cost and now you got to
pay up a couple thousand or more than a couple thousand dollar your buyer's agent they are going to ask for a little bit of help if you're not going to negotiate it in the deal they may just say we're going to offer you know your list price less 2% because they have to pay their buyer's agent this is a theory that I have and I know other agents feel this way too and again don't get mad at me this is what I'm speculating I could be completely wrong this is all new right now this is
going to take some time to play out so what I'm saying to you today may not mean anything 6 months from now or a year from now now here's the other question this is the number one question that I get asked all the time can I just go to the listing agent can I not hire a buyer's agent and go directly to the listing agent yes you can do that but be aware now you're going to enter dual agency now dual agency can be an issue because the listing agent is now representing not only the
seller but they're representing you as the buyer and their fiduciary responsibility is to the seller they're not going to be really working with you they're not going to be negotiating anything for you they're not going to be you know helping you out along the way because they have to work for the seller that's the issue you can run into now if you're confident enough and you can handle it you think I don't need the help of a buyer's agent I'm willing to go to a listing agent that's your prerogative and you can do that my
concern is for the firsttime home buyers who don't know what they're doing they need need the help of an agent to get them through the whole deal to advocate for them to negotiate on their behalf to be fairly represented this whole thing worries me as far as them having to pay for an agent because they need that representation so this is going to be super challenging for firsttime buyers and it I do worry for them I really do so if you do choose to go work directly with that listing agent just be aware of that
you're not going to get any representation at all and it is a risk you know you could be leaving money on the table if there's issues with the negotiation of inspection items you may not get everything that you want because that listing agent is again working directly for the seller so August 17th this is how it's all going to go down I hope I answered your questions here today regarding buyer agency agreement and how to navigate this and you know as if you have any questions feel free to reach out to me or reach out
to your local real estate agent to get more information and be patient with us this is all new it's all just starting we're all trying to navigate this so I really appreciate people's patience with this and their understanding you know this is all new to us too if you need to get connected to a real estate agent in your area whether you're buying or selling a home you can click the link down below fill out the form and I will get back to you with about 24 hours and we'll have a conversation about what your
needs are with selling or buying a house thank you so much for watching me today to get your dose of Real Estate reality my name is Jackie Baker and I will see you next time
