Simplifying the Changes

If you're in the market to buy a home, the recent settlement involving the National Association of Realtors (NAR) has introduced some changes to how real estate transactions work—especially when it comes to paying your agent's commission. In the past, it was common for sellers to automatically cover the buyer’s agent commission as part of the transaction. But now, things are more flexible and transparent.

So what does that mean for you as a buyer? Let’s break it down in the simplest way possible by walking through three different scenarios using a couple, John and Maria, who are looking to buy their first home.

How Buyer’s Agents Get Paid Now

Under the new rules, sellers are still often willing to contribute to the cost of the buyer’s agent commission, but they want to be sure they’re not overpaying. In the past, a seller might offer 3% of the sale price toward the buyer’s agent, regardless of what the buyer and their agent had agreed on. Now, sellers are more likely to only cover the exact commission rate that has been negotiated in the buyer’s agency agreement between the buyer and their agent.

For example, if your agent has agreed to a 2.5% commission, the seller will likely pay that—but they won’t automatically offer 3% anymore. This is actually good for sellers, as it ensures they’re not leaving money on the table, and it encourages more honest and open discussions about costs between all parties.

However, if a seller chooses not to offer any compensation for the buyer's agent, they could face a potential drawback: fewer buyers may be able to afford all the upfront costs involved in buying a home. With buyers already needing to cover their down payment and closing costs, adding the cost of their agent’s commission could make the home less attractive or even unaffordable for some. So, most sellers will still want to offer some compensation to keep the buyer pool wide and competitive.

Buyer’s Agency Agreement: The New Normal

One big change to note is that buyers now need to sign a buyer’s agency agreement before viewing homes. This agreement clearly spells out the terms of your relationship with your agent, including how much their commission will be. The good news is that these agreements are flexible—you can negotiate the commission and even set the time period. If you only need the agent for a day to tour a few homes, that’s an option. Or you can create a longer-term agreement if your home search is more extensive.

This agreement adds transparency to the process and ensures everyone is on the same page from the start.

Real-Life Scenarios: How the NAR Settlement Impacts John and Maria

Scenario 1: A Fair Match

John and Maria signed a buyer’s agency agreement with their agent, agreeing to a 2.5% commission. After a few weeks of searching, they found a home they loved. The seller had initially planned to offer a 3% commission to the buyer’s agent. Under the new rules, the seller was happy to only pay the 2.5% that John and Maria had already negotiated with their agent.

This worked out perfectly for both parties: John and Maria didn’t have to cover any additional fees, and the seller was happy not to overpay on the commission. The new system encouraged clear communication, and the transaction moved forward smoothly.

Scenario 2: Seller Offering Less

In their next search, John and Maria found another home that piqued their interest. However, this time, the seller was offering only a 2.25% commission to the buyer’s agent. Since John and Maria had agreed to 2.5% in their buyer’s agency agreement, there was a 0.25% gap between what the seller was offering and what they had agreed to with their agent.

After discussing their options, John and Maria decided to ask the seller to cover the additional 0.25% commission. If the seller agreed, it would save them from having to pay anything extra. But if the seller refused, John and Maria would need to cover the difference out of pocket, which would be due at closing. This scenario highlights how each transaction is unique, and buyers need to be prepared for potential negotiations or extra costs.

Scenario 3: A Tougher Decision

The third home John and Maria were interested in posed a bigger challenge. The seller had set an inflexible 1% commission for the buyer’s agent, far below the 2.5% that John and Maria had agreed to pay their agent.

This meant they would need to come up with the additional 1.5% commission themselves. While they loved the house, the extra commission would add significant costs to their purchase, making it harder to justify moving forward with the deal. Knowing this upfront allowed John and Maria to make an informed decision, weighing whether the home was worth the additional expense or if they should continue their search for a property with a more favorable commission structure.

What Does This Mean for You?

Every home transaction is unique under these new rules, and the buyer’s agent commission is no longer a set, automatic expense for the seller. Instead, it’s a point of negotiation that may vary from one home to another. As a buyer, it’s important to understand how much you’ve agreed to pay your agent in the buyer’s agency agreement and be prepared to negotiate this with the seller—or cover any gaps yourself.

Key Takeaways for Buyers:

1. More Negotiation: Your agent’s commission is now up for discussion in every transaction. Sellers will likely cover the amount agreed upon in your buyer’s agency agreement, but it may not be a blanket 3% as it was in the past.

2. Buyer’s Agency Agreement Required: You’ll need to sign an agreement with your agent before viewing homes. These agreements are flexible, allowing you to set the commission and time frame.

3. Unique Scenarios: Each home you consider may offer a different commission rate, so be prepared to negotiate or pay the difference out of pocket if necessary.

Conclusion

The NAR settlement has changed the way real estate transactions are handled, but it doesn’t have to complicate your home-buying journey. With clear communication and a little flexibility, you can navigate these changes smoothly. Whether you’re like John and Maria and find yourself negotiating commissions or weighing whether a home is worth the added cost, understanding how this system works will help you make the best decision.

At Campbell Salgado Real Estate Group, we’re here to guide you through these new rules and help you get the best deal possible on your home purchase. If you have any questions about buyer’s agency agreements, commission negotiations, or what this means for your next move, feel free to reach out—we’re here to help!

At Campbell Salgado Real Estate Group, we’re here to guide you through these new rules and help you get the best deal possible on your home purchase.

If you have any questions about buyer’s agency agreements, commission negotiations, or what this means for your next move, feel free to reach out—we’re here to help! Just give us a call or text at 503-951-8547 for a complimentary, no-pressure consultation on buying a home with us.