Contract changes due to the NAR settlement ruling will be in effect beginning August 17, 2014. Thankfully, Montana will not be impacted as heavily as many other states because we have been utilizing the Buyer Representation Agreement while many states do not have this contract. Here is what you need to know right now!
How does the settlement impact buyers?
NAR will require that all buyers sign a Buyer Representation Agreement prior to viewing any property with an agent. This form is a common practice in Montana, although it’s not always signed in advance of touring properties. I have been flexible on this in the past because I’ve thought of it as dating before signing a marriage certificate, so that clients and myself can be sure we are a good fit for one another. Now, it is a requirement in all states that this is signed in advance of opening any door.
Some helpful tips:
- Please reach out to me in advance of the perfect property hitting your Zillow feed so that we can cover this contract when we are not rushing to get inside a property! If you think you’ll buy within the year, reach out to me now so that we can cover the basics.
- This contract takes time and it will require a conversation to be sure you understand the contractual relationship we will be stepping into.
The agreement outlines whether the buyer’s agent compensation will be:
- Paid out of pocket in addition to buyer's closing fees.
- Covered within the listed price and provided by the seller/shared as part of the listing agent’s compensation.
- Not offered up front, but negotiated with the seller/listing agent when I present the offer.
Every property will offer different options and I will always let buyers know up front what our course of action will be.
This inevitably means that some properties will become unaffordable to many buyers because they simply don’t have the extra cash. I will work extra hard to find a property for you that covers these fees. As of now, over 95% of houses on the market in Lewis and Clark cover 2.5% for buyer agent compensation and many sellers see the benefit of keeping it this way. Every seller gets to choose, just like they always have–nothing is changing with that.
If you are looking for properties in another town or state, I can help you be certain that you are signing a contract with a qualified agent that is following best practices for how to represent you from points A to Z. Let me know where you or someone you know is looking and I will help guarantee you are not locked into a contract to pay someone inexperienced in negotiating on your behalf.
How does the settlement impact sellers?
It doesn’t impact sellers in my opinion. Sellers have always had the option of including buyer agency compensation (BAC) within the sales price and most people choose to offer this since buyers are often paying out of pocket for down payments, closing fees, inspection fees, and moving expenses.
Montana’s Listing Agreements and Closing Settlement Statements have been pretty transparent with the explanation of what amount of the total compensation will be shared with the buyer’s representative and seller’s representative. Other states have not been transparent and this is what caused the lawsuit with NAR.
Real estate agents and brokers will continue to set their personal rate just as they have always negotiated this with sellers. Some work for 6% and some work for more or less. It is an agent’s choice, just as much as it is a client’s choice to choose what level of service they want from their representative.
The NAR settlement has made many sellers feel like they no longer need to offer to pay the buyer representative–they have never “needed” to do this but it has been the popular choice in Montana. Many sellers will continue to list their property with a price that includes all agency representation for sellers and buyers, and some will not. As always, there is a lot to navigate during the real estate process so please make time for these conversations in advance so that everyone can find a win-win.
Please do not hesitate to reach out to Breena to go over any questions you have regarding how this may impact you. Breena Buettner | 406-202-8002 | breena@kw.com
