PRESS RELEASE FOR BUYER CLIENTS
For immediate Release - March 16, 2024:
By Scot D. Campbell, Broker of Record Coldwell Banker-Campbell Realtors, Huntington Beach, CA
In response to the Sitzer/Burnett v. National Association of REALTORS® (“NAR”) lawsuit, NAR announced changes to the Realtor MLS rules.
The changes reflect the most significant modification of the rules of agency since the practice of Buyer Agency was introduced following the Easton V. Strassburger case in 1984.
The changes to the Multiple Listing System were announced on March 15, 2024 and the rules will become effective in July 2024:
1) Agents are required to sign a written Buyer Representation Agreement with their Buyer Clients wherein compensation to be paid by the buyer is specified.
2) Seller paid buyer commissions will no longer be published in the Realtor MLS. Instead, the listing agent will publish a dollar amount or percentage that the seller is offering to credit the buyer through escrow for the payment of closing costs including the Buyer Agent commission.
The NAR announcement has left many Homebuyers with questions and concerns:
Q: Will buyer representation agreements become mandatory under California law?
A: We don’t know whether there will be future proposed legislation that requires California licensees to use Buyer Representation Agreements; however, it is clear that the industry is moving toward mandatory agreements between Buyers and their Agents.
Coldwell Banker-Campbell Realtors uses a one-page Simple Buyer Representation Agreement along with the C.A.R. Standard Form BRBC (which specifies that the seller credit money from escrow to pay the Buyer Agent commission).
Q: What if a buyer doesn’t have enough money to pay for a Buyer Agent commission?
A: The C.A.R. Standard Form BRBC can be included with any offer a buyer wishes to make on either listed or unlisted properties. In essence, a credit to the buyer’s closing costs from the seller pays the Buyer Agent commission in the amount previously negotiated between the Buyer and the Buyer Agent in the Buyer Representation Agreement.
Q: Will this change how homes are bought and sold in California?
A: The answer is absolutely “Yes”. Buyers will formally “hire” a Buyer Agent and the agent compensation will be agreed in writing before commencing the process of locating a home to purchase.
Q: Can a seller choose to offer “No Commission” to the Buyer’s Agent?
A: The answer is absolutely “Yes”. But, practically this has been the case for many years in our area. The California Regional Multiple Listing Service has maintained rules which allow an offer of compensation to the Buyer’s Agent of just “One Dollar”. Yet, sellers have very rarely offered a $1 commission because “no commission” was found not to be a sound marketing strategy for home sellers who wanted to generate as many showings and offers as possible.
Q: Can a seller choose to offer No Credit to the Buyer’s closing costs when an offer is submitted.
A: The answer is absolutely “Yes”. But, the new NAR rules call for an announcement in the MLS for each listing indicating how much of a credit the Seller is offering to the Buyer for closing costs which the Buyer can use to pay the commission.
Just as Sellers found in the past that offering a $1 commission not a sound marketing strategy generating lots of showings & offers, it is likely that Sellers will discover the same is true if they offer No Credit to the Buyer’s Closing Costs (for payment of the commission).
Q: If the seller is offering a credit in the Realtor MLS that is less buyer wants, can the Residential Purchase Agreement “offer” include a Credit Request which is greater than what was published in the MLS?
A: The answer is absolutely “Yes”. This is exactly what the C.A.R. Standard Form BRBC was designed to do for Buyers.
Q: How much of a commission should the Buyer agree to pay the Buyer’s Agent in the written Buyer Representation Agreement?
A: Commissions are negotiable by law. The commission you elect to pay your Buyer’s Agent is up for negotiation.
A very responsive agent working for a reputable brokerage with a brick & mortar office who provides you with Full Service in locating the property, negotiating the sale, helping with inspections & the Request for Repair, following up on escrow, making sure the Seller follows the terms of the Residential Purchase Agreement, and countless other details is worth much more than a Buyer Agent who offers little or no help other than writing the offer… and happens to have very poor negotiating & follow-up skills.
Like anything else, you get what you pay for… and buying a home is generally the biggest financial decision you will make in your lifetime. Good advice is very valuable, and a hard-working agent can make the difference between a good transaction and a regrettable one.
Ultimately you will decide the Buyer Agent commission offered to your Coldwell Banker-Campbell Realtors agent, and your agent will do their utmost to negotiate a credit offered by the Seller in an amount which covers the commission.
At the end of the day, the Seller has put their property on the market to get it sold… not to quibble about how much the Buyer’s Agent is going to be paid.
From reading the headlines in the media, you might think that most sellers that contacted me asked the questions: “Does this mean I do not have to pay a commission to get my home sold?”
Perhaps you think Sellers are thrilled about the NAR Announcement. In fact, they are not happy, they are worried. The question I received from Seller clients since the ruling was this: “How am I going to get my home sold if I can no longer offer a commission to Buyer Agents to bring buyers to purchase my home?”.
Sellers understand that Buyer Agents perform many important tasks in real estate transactions… starting with having the “trust” of the Buyer which was built during the interview process or because the agent has already done transactions with the buyer, their family, or friends in the past.
Sellers rely on Buyer Agents to bring prospective buyers to see their home, explain why the home is a good one to purchase, and demonstrate the value of the home using neighborhood sales comparables.
The truly savvy Sellers understand that without Buyer Agent Representation, many… perhaps most, Buyers would never write a market price offer on their home.
Certainly, the law of unintended consequences is now in effect. It will take a little time for the residential real estate industry to settle in on a new set of standard practices.
At Coldwell Banker – Campbell Realtors the management team has over 50 years of experience. We are determined that the recent NAR Announcement and rule implementation shall not take the Dream of Home Ownership away from any of our clients.
Our greatest concern is that a future interpretation of the rule changes will negatively affect buyers using FHA & VA financing. Understand that we will be advocating for all of our low down payment clients in our discussions with the C.A.R. attorneys.
Rest assured, we are in consultation with our attorney and top attorneys at C.A.R.
It is my goal as the Broker of Record for Coldwell Banker-Campbell Realtors to minimize any negative aspects for home sellers which may result due to the rule changes announced by NAR
I am available to speak with you on the telephone or we can meet in person at our oceanfront office to answer all of your questions via phone, text, or email: 714-336-0394 ~ Scot@Campbellrealtors.com
NOTE: The information contained in this Q&A is from the most accurate data sources as of March 17, 2024. It is possible and likely that bulletins & rulings from the California Department of Real Estate, Federal Department of Justice, and Federal Judges may clarify or change the landscape. We will issue further guidance as new information becomes available. We welcome your inquiries as to any changes, and it is recommended that you verify all aspects contained above as you move forward with your real estate transaction.