Sign a buyer's agreement before even being shown a house?

[MemoriesByTheMile]

This all changed after the NAR legal settlement last year.
In the USA, unlike most countries, we have historically had both buyer agent and seller agent and they were BOTH paid for by the seller. In many other countries, if a buyer wants an agent, they hire and pay their own agent.
With the settlement last year, the NAR (National Association of Realtors) agreed to change some things to no longer force the seller into paying both buyer and seller agents (among other things). As a result, now if you want to see a house with an agent, you have to sign paperwork that you warrant that the agent will be paid x% and if the seller won’t pay it, then you as the buyer will.
I like the change. We have sold and bought houses without realtors and like having the option clearly laid out now. But it is a change that everyone needs to learn and get used to.
Every realtor will have you sign this paperwork now before they show a house. But you can also try to see the house without a realtor.

 

[redbaron]

The NAR agreement is a good thing for those that understand. It’s a bad thing for the common person making in frequent purchases.

As a real estate investor, I am very happy with the NAR. I have a team of agents around the country that I work with and we have an understanding that they will end up with 2% in their pocket when the deal closes.

Often the 2% comes from the seller at closing, but in the end I am paying, as it always has been.

Prior the the NAR, I still had the same arrangement. Often the sellers agent was making 2%, their broker 1%, and my broker/agent making 2%.

The deal we closed last week was a 1% to selling broker/agent and 2% to my broker/agent.

If your not dealing directly with the broker then there are more commissions to be paid out.

When buying a home as a one off, the best thing you can do is sign a limited agreement for that one property the agent shows you and for a term no longer than 3 months. Agreeing to 3% is the norm, and unless your buying a high value ($4M+) or frequent transactions, it will be difficult to get less than 2%.

I personally prefer to pay my broker 2% for the value they bring, but as I said, this is a business for me so I look at it very differently than a one off purchaser would.

 

[MemoriesByTheMile]

The NAR agreement is a good thing for those that understand. It’s a bad thing for the common person making in frequent purchases.

As a real estate investor, I am very happy with the NAR. I have a team of agents around the country that I work with and we have an understanding that they will end up with 2% in their pocket when the deal closes.

Often the 2% comes from the seller at closing, but in the end I am paying, as it always has been.

Prior the the NAR, I still had the same arrangement. Often the sellers agent was making 2%, their broker 1%, and my broker/agent making 2%.

The deal we closed last week was a 1% to selling broker/agent and 2% to my broker/agent.

If your not dealing directly with the broker then there are more commissions to be paid out.

When buying a home as a one off, the best thing you can do is sign a limited agreement for that one property the agent shows you and for a term no longer than 3 months. Agreeing to 3% is the norm, and unless your buying a high value ($4M+) or frequent transactions, it will be difficult to get less than 2%.

I personally prefer to pay my broker 2% for the value they bring, but as I said, this is a business for me so I look at it very differently than a one off purchaser would.

Another option for a buyer is to not use a realtor (in some jurisdictions) and use a real estate attorney to assist with the legal paperwork.
Last house we purchased (prior to this NAR settlement) we did not have an agent and we tried to negotiate to get the buyer’s agent % given to us as a discount on the price. But the agreement that the seller signed to list the house said the seller would pay 6% (the exorbitant norm in this area) and IF there wa a buyers agent/broker then they would split it with them.
So because we didn’t have an agent, the seller paid a full 6% to their broker/agent.
We (buyers) got a thank you note from that sellers agent after we made the purchase.

Very happy with this NAR settlement and the change, as the market adjusts and learns how this should work now this will result in lower closing costs to the seller.

 

[redbaron]

Another point is that as a seller, it gives me a lot of flexibility. I can offer my listings on the MLS for no fee, and the buyers agents will contact me directly to negotiate fees. It really is a better system for those that deal with it routinely.

A lot of bad agents have left the business, and more brokers are getting out and selling/showing and thus raising the quality of the profession.

 

[steve@kenai]

This isn't directly RV related but there is a lot of wisdom and experience in this group. So I'm going to ask your opinions:
We noticed a house for sale in our area, and I found it listing through realtor.com. It seems to be a good fit for us so I click the button that said text me and never got a text. So the next day I click the button to contact an agent and never got a reply to tha.
So I contacted a well-known local realtor to arrange for a showing ...and the receptionist said that an agent would be in touch with me. They never contacted me.
So I called a different company that seems to be especially active in the area, and after speaking with the receptionist, the owner herself came on the line to speak to me. She says there's a new thing that's been an effect since September that requires me signing a buyers agreement before they would even show me the house. This smells fishy to me - I've had several bad experiences with realtors and sellers, so I trust them about as much as.... time-share sellers. I'm sorry if some of you are realtors, I have sold 3 houses and bought two houses through realtors, and had some unpleasant quirks every time (failure to disclose, lowballing, etc.) I'm uneasy about any commitment at this stage.
now I'm beginning to wonder if this is why that beautiful house been sitting on the market for six months.
I decided to drop the whole thing, until I find out more about this so-called buyers agreement.
I did see a couple of Google articles that say "beware"..... well what am I supposed to do?

A quick disclosure; I operated and retired from a single desk real estate brokerage in commercial ranch, farm and timber properties for many years. I didn't participate in residential properties or MLS and I did not join the local or national realtors association. I simply maintained a broker's license in the states that I operated in. I was exposed to realtors frequently and kept them in line using common sense. Do not sign anything prior to determining your interest based on your review of the property and the condition of title, CC&R's etc.! Repeat, sign nothing!! Research the local records and determine who owns the property. The the county clerk and tax collector's offices will have the name and address of where they send the tax statement to. If you can't get an acceptable response from the realtor contact that owner directly. Tell the owner you choose to not be represented by the listing realtor and should you and the owner come to a buy/sell agreement you will not be obligated to a fee agreement that you are not a part of. The title and escrow office can help you with the forms and, if you choose to, you can bring a real estate attorney in on your behalf. Realtor behavior can be bazar. Just use common sense and stand your ground. The Seller may have signed an obligation to a realtor that you can't avoid. If that's the case, exit the effort. The Google articles you mentioned are correct. BEWARE!

 

[Jabber Jaw]

RED FLAG!!!!
I bought a 2nd home in Virginia, January 2024. Did a video tour, then drove 700 miles, did a personal tour, & only SIGNED a contract, after making a verbal "offer to purchse"!
Also, bought/built a new home in Florida in 2020, only signed contract after decision on floor plan, lot, etc; then made "offer to purchase"!

 

[MemoriesByTheMile]

@Jabber Jaw
The NAR settlement was signed March 15, 2024 (after your recent buying experience) and it was in August that new rules started to take effect.
This is the new normal

https://www.nytimes.com/2024/11/26/realestate/nar-settlement-approval-commissions.html

 

[redbaron]

Keep in mind, this only affects “realtors” and not all real estate agents and brokers. Regardless of the ruling, the entire industry has reacted.

For first time buyers / sellers or those that do so infrequently, the process will most likely be very different than it was prior to the ruling.