New Home Buyer and Seller Considerations
Chances are you already heard important changes came to the Real Estate Market. To sum up those changes, Listing Brokers can no longer negotiate commissions with Sellers with any part of that commission paid to Brokers working with the Buyer. Home sellers negotiate services and commissions to sell their homes, and Buyers negotiate services and commissions with the Broker they choose to work with and who represents them.
When this new system works as intended, the process is simple. As usual there are always exceptions to the rules as well as options to consider. Home sellers are free to offer payments to Brokers working with Buyers. The new system is designed to make that option more transparent to home sellers and give home sellers more control over the money they spend to sell their homes.
Home sellers can choose to price their homes to provide Buyers with a savings to pay the Broker they agreed to pay a commission. One of the goals of the court decision was to lower commissions Sellers pay and hopefully lower home prices. It is up to Sellers to pass any savings onto Buyers. Sellers can also agree to pay a part or the entire commission the Buyer agreed to pay the Broker who represents them. The decision is entirely the Sellers. The new system intends to make commissions more transparent while placing more control in the hands of Buyers and Sellers.
In the least complicated scenario Sellers will negotiate terms, conditions, services, and commissions with the Broker they choose to work with. Buyers will negotiate terms, conditions, services, and commissions with the Broker they choose to work with and pay the commission to the Broker at closing.
Sellers can experience complications when considering paying commissions Buyers negotiate with the Brokers they chose to work with. Buyers never negotiate terms, conditions, services, or commissions Sellers agree with in a Listing contract. So why would Buyers ask Sellers to pay for an agreement they signed with a Broker to represent them?
Seller have no control over agreements Buyers sign with Brokers they work with. On the other hand when Buyers ask Sellers to pay commissions they agreed to pay, Buyers get involved with not only Listing Contracts Sellers signed to sell their homes, Buyers also get involved in offers Sellers signed to purchase their new home.
Sellers often use funds from the sale of their home to make down payments on their new homes. When Buyers begin cutting into those funds it can effect the down payment Sellers planned on making. Reduced down payments can also effect terms Sellers negotiate on the loan and may effect the interest rates Sellers pay. Sellers need to examine all the facts and possible out comes when they decide to entertain negotiations with Buyers. There are a few options for Sellers to consider.
Sellers can refuse to pay Buyer’s Brokers. Sellers can decide to keep Seller contracts separate from Buyer agreements. Sellers pay the Broker who represents them and Buyers pay Brokers representing them.
Seller can agree to pay a portion of the commission a Buyer’s Broker is asking. Sellers can also agree to pay the full commission. Sellers can agree to lower the selling price of the property and Buyers can use the savings to pay their Broker. Needless to say, whenever Sellers consider paying Brokers representing Buyers, it will take time and take away from funds Sellers are anticipating. When the court decided to put more control on the hands of Sellers and Buyers, they never said it was going to be easy.