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Before You Click…
There is so much at our fingertips in today’s world. A simple inquiry will get you an insurance quote and or a prequalification for a home loan. Just click HERE.
The real estate industry has conditioned Buyers to act now and think about it later. With the national inventory shortage of homes for sale, Buyers are searching diligently every hour to check if there is anything new on the market. It’s a continual refresh on the distribution sites that feed off of local Multiple Listing Service providers. It’s their job to get the information out quickly.
However, I caution Buyer’s…Not So Fast.
Why?
Imagine seeing what you consider to be an ideal property that has popped up on your new listing notification. To the right side of the webpage is the call to action button, “SCHEDULE A SHOWING.”
Know before you go or in this case, know before you click. Your inquiry will be routed to an agent who has paid for leads in specific zip codes. This is how some real estate professionals build their business and create a strong buyer’s clientele. It’s an excellent means for buyers and an agent to come together.
But there have been several industry changes that Buyer’s need to understand as they meet ‘the agent’ at the door.
In 2024, the National Association of Realtors mandated changes to their industry practices as terms of the class-action lawsuit: Burnett v. National Association of Realtors
Here is what the settlement means for homebuyers:
- You’ll Sign Before You Tour: You will be required to sign a written agreement with your agent before checking out a home. Make sure this agreement reflects what you’ve talked about with your agent, including the services and their costs.
- Compensation Clarity: The buyer agreement needs to cover four key points about compensation:
- It must clearly state how much the agent will be paid or what rate will be used.
- Compensation needs to be straightforward (think $0, a flat fee, a specific percentage), not vague (like “whatever the seller offers”).
- There’s a rule that the agent can’t get paid more from any source than what’s agreed upon.
- The document must note clearly that fees are negotiable and not fixed by law.
- Written Agreements for Tours: This applies to both in-person and live virtual home tours. But don’t worry—if you’re just chatting with an agent at an open house, you don’t need to sign anything.
- Seller Compensation Offers: Sellers may offer to compensate your agent, but this offer can’t be shared on the MLS, which is where buyers and listing agents typically exchange property information.
- Concessions Are Still On the Table: You can request seller concessions, like having them cover your closing costs.
These changes were effective on August 17,2024 and now, when you request a showing, the agent will need you to sign a Buyer’s Agency agreement before they open the door for you.
https://www.nar.realtor/the-facts/homebuyers-what-the-nar-settlement-means
Car-hood contracts may not be your wisest decision when it pertains to possibly purchasing the largest asset you may ever own. Slow down.
It is understandable the urgency to view the home of your dreams, but it is important you understand what you are buying and who you are hiring. Don’t be fooled with a “one-time” showing agreement. Most likely this agreement, which is a legal and binding contract, may be specific to the address being shown and it could have a ‘protection’ clause for the agent, meaning if you purchase this home within the protection period specified, you will owe that agent a fee, even if you do not want to work or hire that agent. Keep in mind, an agent’s time is valuable! It makes sense for them to expect to be paid for their work.
This document must state the agent’s fee and it must have an expiration date. In Iowa a Buyer’s Agency Agreement can not exceed 12 months. That is a long time if you tie yourself to someone you do not know. .
Find the Right Fit
Buyer’s Agency Agreements are a good addition to the industry, but it requires Buyers and Agents to pre-plan the process. A home purchase should not be a hasty decision nor should hiring the right agent.
If you’re thinking about making a move, do your homework on who to hire, just like you do when looking for your dream home. Interview agents and find the one that you trust and who will invest the time to explain how the purchase process works and answer all your questions.
