TAMPA, Fla. — In August, there will be a profound shift in how buyers and sellers negotiate commission fees when buying a new home.
ABC Action News reporter Michael Paluska connected with realtors across Florida and the country to gauge their feelings about the new rules. Some said they were "freaking out a little," others "not concerned," while many were "worried" about the impact on low-income families, first-time home buyers, and Veterans.
Kelly Ackley is a Global Sales Advisor with Premier Sotheby's. She tells Paluska that everyone must sign a "Buyer Brokerage Agreement" and that commissions previously listed on the MLS are gone.
"So what I'm willing to do is this might be a six-month buyer brokerage agreement. So what I've thought about doing when this goes into effect is saying, Okay, Mr. Buyer, we're new, you don't know me, you don't know my potential or how I'm going to help you. So, let's sign up for a week. There's no limit on how long or how short it needs to be," Ackley said.
Ackley says the changes mean the seller is no longer required to pay the commission for the buyer's agent.
"But now that sellers are not required to pay me, buyer, you must agree to pay me. So, on this buyer brokerage agreement, there will be a commission, which will probably be 3%. So, Mr. Buyer, if I find you a home where the seller is no longer willing to pay the buyer agent commission, Mr. Buyer, you will pay me the 3%. And that's going to be very foreign for buyers because that has not always been that way. But what we want to let people know is it's still negotiable, just as they've always been negotiable."
Jay Quigley with Florida Executive Realty said that could knock some homebuyers out of the market.
"Your veterans, first-time homebuyers, those are the two that are getting squeezed by this change," Quigley said. "Initially, the Veterans Administration would not allow the veteran to pay any of those expenses for an agent. They have now issued a bulletin where they will be flexible and allow a veteran to pay for their agent. So basically, it's really about being clear about who is paying what and how much you're being paid."
For example, if a seller doesn't agree to pay a commission, some realtors tell Paluska they won't even bother showing the home to a potential buyer. If a commission is 3% and the house costs $400K, the buyer must pay their agent $12K.
Quigley and Ackley both agree that buyers need to do their homework. Research your realtor, read reviews, and meet face-to-face or over Zoom before seeing a home.
Quigley told Paluska you get what you pay for.
"Should I negotiate commission with my realtor?" Paluska asked.
Yes, you can. But it's kind of like, if you want that very nice watch, which you know, it cost $5,000, Do you think you're going to go into the jeweler and say, I really want that watch, but I'm only going to pay you 3500 bucks," Quigley said.
"It's all anyone is talking about,"Jeff Chirico, a realtor in Pennsylvania with eXp Realty, said. "We are all trying to figure out what it will look like to get a fee agreement or buyer agency agreement signed with a buyer before we even walk through the door of the first home."
Chirico told Paluska they would not know the true impacts of the changes until Aug. 17, when the rules begin to go into effect.
"This settlement will force us to learn how to better articulate our value to buyers to get them comfortable to sign a document before we even unlock the first door. We are unsure how buyers will take that," Chirico said. "I imagine that a lot of buyers will try to find other ways to see houses so they don't have to commit to one agent right away, for example, by attending open houses or contacting the listing agent to show it. Since some buyers won't have enough money to pay for buyer broker commission out of their pocket, we will have to ask the seller to do so in any offer we make. Some of our agents are worried that in multiple offer situations, other agents may start reducing their commission to bargain basement levels to get their clients under contract."
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