NAR Buyer Agent Commission Details- Carrie Mitcheff

Navigating Buyer Agent Agreements and Compensation as of August 17Th.

As the real estate landscape evolves, the recent NAR settlement has introduced new dynamics in how buyer agents are compensated. This presentation aims to educate buyer agents on innovative strategies to cover these costs effectively. By understanding these options, agents can help buyers can make informed decisions and can better assist their clients in navigating these changes. These five creative compensation structures will help you adapt to the new norms and ensure a smooth home-buying process.

1. Seller Compensates Both Agents Equally (Same as prior to NAR Settlement)

• Description: The seller agrees to compensate the listing agent and the buyer's agent individually
• Key Point: This compensation structure must be disclosed to both parties. Unlike previous practices, it clarifies that the seller is paying both agents directly.

2. Buyer Pays Buyer's Agent Compensation in Cash

• Description: The buyer agent negotiates the best purchase price and pays their agent's commission in additional funds to close.
• Buyer's Action: The buyer directly compensates the buyer's agent without increasing the transaction amount.

3. Buyer Increases Purchase Price to Cover Buyer's Agent Commission (Built into Purchase Price)

• Description: The buyer increases the offer price and requests that the seller pay this increased amount as the buyer agent's commission.
• Mechanism: The increased purchase price covers the buyer's agent's commission, effectively transferring the cost to the seller through the transaction.

4. Our Plan If We Miss Value.

• Description: The Appraisal comes in 34K short.
• Buyer's Action: Nothing, Absolutely nothing, we protect rate, loan amount , cash to close, and agent commission.

5. Seller Compensates Listing Agent and Partial Buyer Agent (Blended Option)

• Description: The seller pays the listing agent's full compensation and only a potion of the buyers agents agreed upon compensation.
• Buyer's Responsibility: The buyer signs a Buyer Broker Agreement agreeing to a total commission for their agent. The buyer covers the remaining difference.
• Payment Method: We will use the higher purchase price in this example.

 Implementation Considerations

• Transparency: Ensure all parties know and agree to the compensation structure.
• Documentation: Clearly outline the agreed compensation method in the Buyer Broker Agreement and other transaction documents.
• Compliance: Adhere to the new NAR rules and local real estate regulations.
• Education: Inform clients about these options to help them make informed decisions and understand their financial commitments.

Buyers' agents can navigate the new NAR settlement rules effectively by integrating these compensation methods while maintaining transaction integrity and client satisfaction.