The NAR Settlement & Buyer's Agency
The National Associations of REALTORS (NAR) recently settled a class-action lawsuit that will have an impact on how real property is bought and sold. Ultimately, we see this as a good thing. The buyer side of the equation will increase in transparency and professionalism. Black Canyon Homes does a lot of buyer business so we wanted to share just a few points to help clarify things. More importantly, we will take all of the time necessary to talk through the changes and how you are impacted. Ask us anything. Key points: 1. All agency compensation (listing and buy-side) has always been negotiable and remains that way. 2. As of August 17, 2024, agents assisting buyers CANNOT show a listed home without an agreement in place beforehand. This is a requirement for any agent who belongs to an MLS (who isn't?). So, when your newly found agent tells you that you have to sign an agreement just to show you a property that you saw on Zillor or Realtor or wherever, they are telling you the truth. 3. Part of the agency agreement deals with buyer agency compensation. As of August 17, 2024, listing agents can no longer publish the buyer agent compensation in the MLS system. Buyer agent compensation has to be negotiated between the buyer and the buyer agent separately. Yes, the comp can still come from the seller side like before. 4. We expect that listing agents will still encourage their sellers to provide compensation to buyer's agents. This remains legal and can be published anywhere outside of the MLS system (flyers, agent websites, etc.). We think that it will be a competitive advantage in our listings to actually promote buyer compensation because homes without will be negatively impacted. Imagine offering even just a small % more than anyone else and what kind of exposure to potential buyers that brings. 5. There are several options for how a buyer's agent can be paid. Examples.... The buyer can pay their agent. The seller or listing brokerage can still pay the buyer agent (like it was commonly done in the past). Or there can even be a hybrid. What we think you will commonly see is that a buyer's agent will negotiate with their buyer to pay a certain amount, let's say 3% for representing them. The buyer will then be responsible for paying that amount. However, in the buyer agreement, there is a check box that says that the seller or listing broker may pay. So, while the agreement says the buyer is responsible, the net is that the seller pays some (whatever he/she agreed to when they listed the house, say 2.5%), and the buyer pays the rest (3% - 2.5% = .5%). 6. It would not surprise us to see the lending industry allow for buyer compensation to be rolled into the loan "one day". The net net of pre-August 17 deals involving financing commonly had that result anyway. Buyer finances 80% of the price, and seller pays all agency compensation out of his proceeds. 7. There might be confusion on how all this plays out as we transition over. Eventually, the market will be savvy to the new rules, and things will stablize. Ultimately, we do not believe that this will be as big a deal as some are making it. We certainly do not agree that this will reduce home buying costs. No one works for free. Are "they" thinking that buyer representation will just go away? Would you walk into a divorce proceding without professional representation when the other party has a trained pro? Who is going to come out on the short end of that stick? REALTORS are pros. They deal with stuff every single day, and representation insures as smooth a purchase with the most favorable terms possible. Change can be good. We believe it will be, and we are big advocates in open communications and an educated consumer. Please feel free to reach out with any questions. The team of Black Canyon Homes
VA Loans and Buyer Representation
NAR Settlement is bringing changes. We all know that some changes are coming to how real estate is bought and sold because of the NAR (National Association of REALTORS) settlement recently. We will talk about that more soon. One BIG change that is coming is that buyers’ agents commissions will not be published in MLS listings. It also means that there will be some sellers who do not cover the buyer agent commission as part of the listing agreement. So, there are a number of new things that must be worked out if a buyer wants representation (and we think they should). What you may not know is that VA loan buyers have not legally been able to pay commissions for buyer representation. It has come from the seller side. The NAR settlement has now created a really tough situation for this group because if there is no coop compensation, the buyer agent will not be paid for VA buyers. Who works for free? No one. So, VA buyers, without representation, will be in a bind. BUT! This past week, the Veteran’s Administration deputy director Michelle Corridon made an announcement at the Mortgage Banker Association’s meeting that the VA will be rolling out a temporary fix to the commission issue and will soon release a circular that “bridges the gap”. Ok. It’s a start. The government actually moved pretty quickly on this. The details are forthcoming, but there is light at the end of the tunnel. What would be really cool is if this started the process to just get the lending industry to allow for buyer commissions to be paid straight out of the loan proceeds. It is in indirect fashion anyway. You can read the entire Housingwire article here.
Stopping Real Estate Fraud
No one wants to be the victim of fraud. In real estate, there are many ways people can get scammed. It's very uncool. Here are a few resources if you feel the need for it: Colorado Foreclosure Hotline: The best resource available to consumers facing foreclosure is the Colorado Foreclosure Hotline, which can be reached at 1-877-601-HOPE (4673). Homeowners who contact the Colorado Foreclosure Hotline to receive assistance stand a much better chance of saving their home than those who go it alone. Colorado Housing Connects: Colorado is a leader among states when it comes to foreclosure prevention. Colorado Housing Connects will get people the help they need. 844-926-6632 HUD Resources: Coloradans behind on their housing payments or who are worried about falling behind can speak with a HUD-approved housing counselor to help them understand their options when they’re facing foreclosure. 800-569-4287 VA Assistance for Veterans: The VA aids veterans facing foreclosure or homelessness regardless of whether they have a VA loan or not. 877-827-3702 Homeless veterans can call the National Call Center for Homeless Veterans at 877-4AID-VET. Stop Fraud: Unfortunately, mortgage fraud gives rise to foreclosures. Colorado owners facing foreclosure due to mortgage fraud can find help on the Stop Fraud Colorado website. We hope you don't need any of these.
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