How will the new laws on August 17th, 2024 effect your real estate transactions?

Check out this video to prepare for the changes that will be in effect for Realtors, home buyers and home sellers as a result of the NAR $1.8 Billion settlement.
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Shemeika Fox: Your Santa Cruz County Real Estate Expert. My passion for helping people achieve their Santa Cruz Real Estate dreams is complimented by my strong work ethic. Our focus is to help you sell your Santa Cruz County California property faster and for more money… and to help you find and buy the perfect home with little hassle.
Shemeika Fox
Santa Cruz Realtor & Personalized Real Estate Concierge
eXp Realty of California Inc.
Fox Realty Group Inc.
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[@jamesdabalos5851]

Thanks for the info. I have heard a few agents speak about the upcoming changes and it seems whenever agents speak of these changes, they are doing so with language beneficial to the buyer and buyer agent. One could post the same information with tips and tricks and information geared towards the seller and how the seller may benefit from the changes by not having to pay the buyer broker. With that said, it is likely listing agents will discourage their clients from not offering to pay buyer agent brokers. Obviously it is easier for a listing agent to sell a property when the seller agrees to pay the buyer broker. The primary reason and spirit of the lawsuit was to end the practice of sellers having to pay the (buyer agent) party of which they are directly negotiating against. It is common sense and still it is not what being emphasized. You used hiring of a lawyer example. When a person goes to sue someone and hires their own lawyer, it would be ridiculous for that person to reach out to the person they’re suing and offered to pay their lawyer. This is the premise of the lawsuit and it is very simple.

[@shemeika_fox]

Thank you for your comment, these are valid points. In California, which is where I am licensed, for the past several decades, commission paid to a buyers agent (and commission paid in general) has always been negotiable. I am having a hard time actually seeing the benefits for a seller. As, should they want to expose their property to as many buyers as possible, they will want to offer compensation so that more buyers can afford their property. In fact the newly incorporated Broker Compensation Advisory that has recently been incorporated into the listing agreement says exactly that: B. Offering Compensation to a Buyer’s Broker is Negotiable: Sellers and seller’s brokers are not required by law or otherwise to offer compensation to buyer’s brokers. The promise of payment from the seller’s broker to the buyer’s broker may lead to a quicker or more efficient transaction because: (1) Knowing the overall cost of broker compensation at time of listing allows a seller to more easily calculate the seller’s net proceeds when evaluating offers and counter offers; (2) The seller’s property may become more attractive to buyers who need a loan to finance the purchase price, since buyer’s broker compensation would be paid from the seller’s proceeds at the time of closing, rather than “out of pocket” by the buyer who may have limited funds. Many buyers have limited funds after paying a deposit, a down payment, property inspections costs, and other costs for closing. These buyers may be more likely to write an offer for the seller’s property if they are able to effectively finance the buyer broker compensation into the cost of their loan rather than coming up with additional funds. By making the seller’s property attractive to all buyers, regardless of their ability to directly pay a buyer’s broker, the pool of prospective buyers for the seller’s property will likely increase; (3) Offering compensation to buyer’s brokers allows the seller to inform brokers representing prospective buyers they can rely on the efficient payment of their compensation without adding to buyer’s closing costs. So yes, compensation is negotiable, it has always been negotiable. It will now just require more paperwork and communication to accomplish the end goal for all! Thank you for engaging your insight is appreciated!

[@seadoo4life127]

@@shemeika_fox so is the theory, you pay your agent? I pay my agent.? To me that would be the lawyer theory. if that’s the case, why would a buyers agent actually want to sell a house if it’s not their listing?

[@burtrussel1535]

My takeaway is that if you want to sell your property then you will still want to offer buyers agent compensation to the buyer. Otherwise they are going to simply steer their clients away from your property. And since it's not listed in the MLS they'll just call and ask the listing agent. Is this correct?

[@shemeika_fox]

@@seadoo4life127that is correct. Starting August 17th. The buyer and their agent will have to enter into a contract similar to that of a listing agreement for sellers. The buyer will have to show that they have the ability to pay the buyers broker fee. Once an offer is submitted on behalf of the buyer, that commission, or compensation can be negotiated with the seller and if the seller is willing to pay some or all of the agreed upon commission, the buyer will have a lower out of pocket cost.

[@shemeika_fox]

@@burtrussel1535Realtors are not allowed to steer their clients based on compensation. We can however advise our buyers the cost difference based on sellers willingness to compensate vs. a property where the seller is not willing to. And then ultimately it will be up to the buyer to decide which property to pursue. Which one would you choose?

[@r1l56me]

Requiring me to negotiate and enter into a contract with an agent that I’m locked into just to go view a property is ludicrous.

[@shemeika_fox]

I couldn’t agree more! It seems the way our industry has operated for decades has served well! I expect this next chapter to be more challenging for buyers, sellers and realtors..

[@talltimbot]

I am not bound by house pimp rules

[@abigailroma9198]

I'm about to List my house in California and my agent wants me to pay both as it was. She said agents are still going to call listings agents before they show a property and ask what the commission is being paid since it's not posted on the MLS therefore I need to pay good commission otherwise agents won't bring clients to see my house. Isn't this what got you guys in trouble in the first place? I know you don't work for free, but when I fork out 55,000 in commission that's a lot of money. And believe me I'm looking for my own home in Zillow and driving out to see them.

[@shemeika_fox]

That’s a great question. You are not required to offer a buyers side commission up front. In fact, you never have been obligated as commissions have always been negotiable. There are now buyer side forms that will be required if the agent is affiliated with NAR and the MLS. On the buyer side form, the buyer will negotiate the buyers agent’s commission and then the buyers agent can negotiate with the seller when the present the buyers offer. It is up to you how you choose to participate in the buyers agent’s commission. Always here to help. Let me know if you have any other questions. And what part of California are you in?

[@kevinerosa]

I'm so happy I went the commercial route and dont have to deal with NAR or being a realtor. The majority of commercial owners already budget the commissions and fees on the deal. Very rare, do I get someone who does not want to pay a commission to either side. Land deals can differ a bit where if theres a bidding war you can have the buyer, usually a developer, pay the fees.

[@shemeika_fox]

Commercial deals seem to be a bit more time consuming, but more streamlined as far as expectations, fees etc. Where do you sell commercial real estate?

[@JanisLefkowitz]

completely confused...right now I have an Exclusive Right to Sell Agreement that already says 2.5% to listing agent and 2.5% to buyer brokerage firm...with the changes, how will this contract that I have be affectdd

[@EveryWhere1111]

Simply marvelous the way you explained everything five stars⭐️⭐️⭐️⭐️⭐️

[@shemeika_fox]

Thank you so much for the positivity!! Really!! You never know what information gets picked up in the ethers, and I always try hard to educate and (entertain!) :) So I do truly appreciate your positive feedback!! Thank you!

[@excusemenoexcusemeno1671]

Man im so confused. Im just gonna ask Chat GPT to explain it to me as if i was 7yr old.😮‍💨

[@shemeika_fox]

That is not a bad idea! 😊 I think we will all be confused for some time! And then things will change again!

[@guineapigzed]

Bend over

[@user-ot3ec9pn4g]

Hi Shemeika for a quick response. I'm thinking about selling a rental home we own, I plan to pay a 2% commision to the buyer's agent. Any buyer's agent who sells my listing will be paid the comission, even after he had his buyer sign an agreement to pay him. Can he collect both comissions from seller and buyer at the same time and does he have to disclose it before escrow opens? Thank you for your response.

[@shemeika_fox]

Got it. So if the buyers agent and buyer signs a buyer broker compensation agreement for let’s say 2.5%, and you are willing to consider a 2% concession to the buyers agent, they would get the 2% from you and the .5% from the buyer to make up the difference, provided there are no addendum etc. don’t would it be that the buyers agent gets paid double. Does that make sense? And the buyers agent should disclose what the compensation is from the seller.

[@user-ot3ec9pn4g]

If the seller offers to pay a commission to buyer's agent on the sale of his home after this agent had sign a contract with his buyer for a certain amount of comission. If the buyer ends up buying that house, can the buyer's agent collect both comissions and does he have to disclose it to both prinvipals ? Thank you

[@shemeika_fox]

Hi there- I would need a bit more information to understand completely what the situation is. If the buyers agent is also the listing agent, then that agent can negotiate their pay both from the seller and the buyer.. is that what you are asking? About dual agency?

[@stefonthemove]

Buyers agents are screwed. Dealing with buyers has always been more work and now you have to worry about getting paid. No thanks!!!

[@shemeika_fox]

I am thinking about it from a different perspective. Now that they will be obligated to sign a contract they will be more committed. How many buyers have just vanished into thin air after hours and hours spent touring homes, downloading and reviewing disclosures and negotiating offers?? And now that they have to sign a document to get the service I do believe the serious buyers will be the only ones we work with and thus our time will be managed much more efficiently. At least that is what I plan to do...

[@Bryan-sb8sn]

No thanks?

[@user-us2gj1wt2n]

Is this applying for leases also? I heard it's only for seller-buyer transaction

[@shemeika_fox]

Great question. The buyer broker compensation agreement is for the sale of a property. I do not believe it is applicable to leases.

[@Take-Me-To-]

This new system is ridiculous and will just cause buyers to avoid buyer’s agents, and to shop for and purchase a home without an agent representing them. Buyers will be unrepresented and at the mercy of the listing agent. And despite their “code of ethics”, Realtors have always steered their buyers to homes that were offering a larger commission payout. Worst part is buyers had no idea, since they couldn’t see the offer of compensation. It was hidden from the public and only visible to agents in the MLS. Now there is no reason for agents to pay for the “right” to be a Realtor, and maybe the NAR will finally crumble. And I was a broker for 12 years and owned my own brokerage.

[@shemeika_fox]

Do you still sell real estate? I do so hope that it doesn't lead to unrepresented buyers. There are so many details and nuances for a home buyer to understand and be supported through. I think if that is the way in which things trend, we will end up in more lawsuits because buyers will not understand what it is that they are purchasing, signing, etc...

[@SlotAngel]

That was great! Question? What happens when you have a Buyer Broker Agreement signed and the Seller is also willing to pay the commission? Does the Buyer's Agent collect from both? Does the Buyer pay upfront or at the closing? Can you limit how many homes to tour?

[@shemeika_fox]

Great question. The agent will not be allowed to collect more than what the buyer broker compensation agreement states. So if the buyer broker compensation agreements shows that the buyer is willing and able to pay their broker 3%, and the seller is also willing to pay the 3%, the seller would replace the buyers fee and the buyer would not have to come out of pocket for the cost of their realtor. You cannot double up, but you can split the fee however all parties agree. Does that make sense? 😊

[@SlotAngel]

@@shemeika_fox gotcha! Thank u

[@SlotAngel]

It makes sense however will you need to disclose the Buyer is willing to pay and has signed an agreement or is it Possible to request the amount of commission from the Seller with the offer and then release the Buyer from the cost of commission in the agreement?

[@skipbogard]

And, what did Zillow agree to, with their own agreements? Buyer's Agents need to start charging $25-$50 a call to view a home. If there is added value to viewing a home, you should get paid up front.

[@shemeika_fox]

Zillow also must comply. As I understand, the Zillow contract will be a 7 day contract that will be sent out after the initial engagement from the phone call. I do also think we will start to see buyers agents bake in a fee for showing property and one that they charge should the buyer not end up buying. Hey, maybe that will be better for the industry. A buyer can no longer just "disappear" after hundreds of hours spent!

[@guineapigzed]

@@shemeika_foxLOL

[@MichelleWintersRealEstate]

If you are in escrow prior to August 17th without a SPBB and the buyers broker commission is in the MLS is the buyers broker commission protected?

[@shemeika_fox]

I believe the MLS offered commission is still applicable. I would copy the MLS to show that it was advertised. And please check with your broker to confirm. Great Question!

[@nicoletennant4830]

I am being asked to sign one of these to look at a rental. Is this needed for rental units?

[@shemeika_fox]

Hi there, I have not heard that they will be required for viewing rentals. Though I suppose all brokerages are able to conduct business as they wish. Are you working directly with a property management company?

[@SlotAngel]

Does the buyer pay upfront or at the closing? Thank you

[@shemeika_fox]

Also a great question! This is a negotiable point. Generally speaking, a buyer will pay at the closing. That said, I have heard that some agents will now be including a clause that if the buyer does not close on a transaction, they will be paid for the time they spent with that buyer.

[@SlotAngel]

@@shemeika_fox thank you.

[@maryschlundt100]

Isn’t it August 13th

[@maryschlundt100]

What I heard was commissions will be removed from mls on the 13th and laws become effective the 17th

[@shemeika_fox]

@@maryschlundt100 I believe in some areas commission is already removed. But all will be enforced beginning August 17th.

[@guineapigzed]

4:00 same old strong arm technique

[@shemeika_fox]

What do you mean?

[@MissBellaMe]

This is completely off topic, but i gotta get the back story on your name. 😂

[@shemeika_fox]

I would way prefer to talk about the origin of my name and yours than this!! ;) I was named after one of my moms students cousins.. Long story, but the student came back from the holidays and was telling my mom about her cousin "Shamika" different spelling.. and my mom fell in love and thought when she has a baby that is what she shall call her. And well, my dad agreed. ;)

[@elvaewell8635]

Ridiculous.

[@DkpProductions]

What a rodeo

[@shemeika_fox]

That is a very kind way to put it. 😂

[@guineapigzed]

As in the buyer and seller are the cattle.

[@shemeika_fox]

@@guineapigzed A rodeo for sure! Though I think we are all being herded a bit at the moment.. Lots to absorb, interpret, and educate.