Important changes are happening in the real estate industry this month. The National Association of Realtors and the Multi-Layer Listing Services (MLS) New rules were introduced Regarding how real estate agents communicate about real estate commissions: This change will bring greater transparency and competition around commissions, a goal that Redfin has always supported.
We know it can be confusing, but Redfin agents are ready to answer all your questions and expertly guide you through the process from buying to selling.
So what exactly will change?
In most transactions, it’s customary for the home seller to pay commission to both their own agent (the seller’s agent) and the buyer’s agent (the buyer’s agent). While it’s always been the seller’s choice to decide whether and how much to pay a buyer’s agent, the process has changed in two main ways.
- Disclosure of Buyer’s Agent Fees: Buyers must agree to an agent’s fee before touring the home. This sets the maximum amount that will be paid to the buyer’s agent when purchasing the home.
- Buyer’s Agent Fee Advertisement: Compensation offers to buyers’ agents have been removed from many MLSs, the databases agents use to share and market property information. Sellers can still pay compensation to buyers’ agents, but they cannot advertise compensation offers on the MLS unless expressly permitted by local rules. As a result, buyer’s agent commission will increasingly be negotiated as part of the offer.
What does this mean for sellers?
The seller will continue to discuss with the seller’s agent the compensation they wish to offer the buyer’s agent. In many cases, it is expected that the buyer will continue to ask the seller to cover the buyer’s agent fee as part of the offer. The seller will evaluate and negotiate the offer as with any other terms.
What does this mean for buyers?
Buyers will discuss the agent’s fees up front to find out what they will charge. Agents will ask you to sign an agreement regarding fees before showing you the house. Still, you can ask the seller to cover the agent’s fees as part of your offer. Depending on how you structure your offer, the seller may agree to pay the agent’s fee directly, or they may offer a concession at closing that can be allocated to pay the agent at closing.
As a buyer, why would you want to sign a contract so early in the process? You just want to view the house and aren’t ready to pay an agent.
New industry-wide rules require a written contract outlining the agent’s commission before showing a property. Unless state law requires otherwise, buyers are not required to sign an exclusive, binding brokerage agreement to show a property. Different brokers have different approaches and policies. Redfin’s approach is transparent and gives buyers flexibility.
Does Redfin require a buyer representation agreement for showings?
Unless your state has other requirements, Redfin has buyers sign a simple fee agreement when requesting a tour with a Redfin agent that discloses the fees they plan to collect at closing. Many sellers will incur this fee at closing.
This fee agreement does not force you to work with a Redfin agent. Once you have a chance to meet with an agent in person, your agent will ask you to commit to working with Redfin. Buyers who commit to working with Redfin before the second tour will receive a 0.25% discount on their fee.
How much does Redfin’s buyer services fee?
Redfin’s buyer agent commission varies by market. We price our properties competitively for buyers, and we’ll save you 0.25% on your commission if you sign with Redfin before your second showing. Lowering your commission by 0.25% can make your offer more attractive to sellers. As with offer price and terms, sellers should compare the buyer agent commission each offer requires and factor it into their decision.
What if the seller doesn’t agree to pay the agent? Am I responsible for paying the agent out of my own pocket?
Many buyers spend all their financial resources on the down payment and have no money left over to pay the agent fees. By now, most sellers understand this and are often willing to cover the buyer’s agent fees from their sale proceeds. If the seller does not agree to pay the agent fees or agrees to pay only a portion of the buyer’s agent fees, they can amend their offer, agree to pay the agent directly at closing, or terminate the contract. In any case, before signing the home purchase contract, you should be aware of the associated costs so you can make an informed decision.
It’s important to have a good relationship with your mortgage lender, who can help you structure your offer in a way that suits your financial situation. Redfin’s mortgage partner, Bay Equity, has loan officers on-site to guide you through this process.*
If I’m selling my house, do I have to pay a buyer’s agent a commission? Should I pay a commission?
The seller always has the power to determine how much (if any) commission to pay to the buyer’s agent. The seller has the following options:
- You can also ask the buyer for their best offer (including the buyer’s agent’s compensation) without setting a deadline and negotiate from there.
- Or, as part of your marketing strategy for your home, you can proactively offer a commission or discount that the buyer can use to pay their agent. This is communicated to the buyer and agent when the buyer’s agent contacts the selling agent to schedule a showing. Whether or not you offer a commission, and how much, depends on a variety of factors that Redfin agents can assist with.
How do you know what a fair price is for a buyer’s agent?
Buying a home is a big decision, so your focus should be on finding the best agent at the best rate. Redfin agents have extensive experience and publish their sales records and customer reviews online so you can see for yourself. The average sales record of Redfin agents is 3 or more times We handle as many properties as a typical agent at any other large brokerage, and we price them as competitively as possible. Connect with an agent and learn more.
*Bay Equity Home Loans has partnered with Redfin. You do not need to work with a Redfin agent to receive Bay Equity services. For more information, Disclosure of affiliated businesses.
