BIG CHANGES, BIG DEAL IN REAL ESTATE

There have been some recent legal changes in how we, as Realtors, are to work. A lot of this information is explained in an animated video I created. It’s on my website (HereAndHappyToHelp.com), but please remember that I’m a Realtor… NOT an artist.
BEFORE:
In the olden days… like last month… it was presumed that the sellers would pay for the buyer’s agent representation. However, it wasn’t really clear how the buyer’s agent is getting paid. The buyer takes out a larger mortgage to pay for the house so that the seller has enough to cover the compensation to their agent who then cuts off a chunk to the buyer’s broker who pays the buyer’s agent. Sooooo…. Yeah, no more of that!
NOW:
The buyer & the seller each pays their own Realtor directly. Just like a listing agent negotiates their compensation with the sellers, now a buyer’s agent will directly negotiate their compensation upfront with their buyers.
MORE MONEY?!:
Won’t this mean that the buyers have to come up with more money for closing?
Maaaaybe…
Just like a seller offers incentives like a pre-inspection or a home warranty when they list their home, they can also offer to contribute to the buyer’s broker compensation.
As new homes come on the market, the sellers will need to decide if they would like to contribute to the buyer’s compensation, & if so – how much.
Before our team shows our buyers any homes, our clients will know how much, if any, the seller is offering. We hate surprise costs & are clear on the financials of your transaction from the start.
An experienced Realtor will help their buyers to decide if they’d like to build the additional compensation as part of their offer or if they’re okay with the difference being added to their closings costs.
EXAMPLE:

As per the law requires, let’s say that Mike is working with first-time home buyers, & he has to negotiate his compensation with his new clients – Buttercup & Wesley. (Nod to my fellow fans of The Princess Bride.)
The buyers decide that Mike’s experience & service is worth 3%. They sign a contract stating that they agree that this is what Coldwell Banker Realty will be compensated upon a successful closing.
They select 3 houses – a red house, a blue house & a yellow house – to tour. (Yes, for this example they are all conveniently different colors & are all listed at exactly $200,000.)
Mike starts researching these properties, & finds out that:
– The owners of the red house aren’t offering any buyer compensation.
– The owners of the blue house are offering 2% compensation towards the buyer’s broker.
– The owners of the yellow house are offering 3%.
Mike then goes to Wesley & Buttercup.
“Hi, guys… if you look at the red house & love it, just so you know, the sellers aren’t offering anything towards my compensation. Per our agreement, if we write a full-price offer on this property ($200,000), the professional fee that we agreed-upon up front of $6,000 will be part of your closing costs at closing, or we can try to negotiate it into the offer.
The blue house is offering to contribute 2% to my professional fee. So if we write a full-price offer, $4,000 will come from the sellers to offset this cost, & you’d only be responsible for $2,000.
The sellers of the yellow house are offering a 3% buyer-agency contribution. So they are taking this cost completely off of your plate for you. Would you still like to see each of the homes?”
Buttercup suggests that they put the red house on hold & just look at the blue & yellow house first since they are financially more appealing. Wesley agrees. “As you wish.” Mike makes the appointments for just the blue & yellow houses.
THE BEST REALTORS ALREADY PRACTICING THIS WAY:
Let’s say that Wesley & Buttercup end up not liking either the blue or yellow houses. They notice, however, that there’s a new black house that just hit the market that looks PERFECT! They asked Mike to see if the sellers are offering any buyer-agency compensation so that they can run some numbers with their lender.
This is where, my friends, an experienced & diligent Realtor can make or break you. Just as an excellent agent can get you more money for your house, a disengaged Realtor can definitely cost you your sale.
Each of my team members have carved out a lot of time in our schedules & have attended several of the same trainings so that we’re well-versed about the new laws, the new documents & the best practices. It’s vital that Realtors are confident in how they are helping our buyers & sellers to navigate this new market.
… but this is definitely not the case with most Realtors.
When we present or request the documents to many other agents that are now legally required, we’re met with blank stares or a lot of questions. These agents not going to the trainings. They’re not educating themselves. They’re not doing what it takes to remain current in these fast-moving waters. This is playing out in very real ways.
Back to the house that Wesley & Buttercup want to see. Mike reaches out to the listing Realtor of the black house.
“Hey, Realtor Buster, I have clients who have an appointment to see your new listing tomorrow – the black house for $200,000. Can you please send over the document officially telling me how much, if any, buyer-agency compensation is being offered by your sellers?”
Crickets.
Realtor Buster doesn’t know what document Mike is referring to because his brokerage only offered one training which he never attended. He never replies to Mike & ignores Mike’s follow up text, email & additional voicemail. He’s too embarrassed or lazy to find out what Mike’s talking about. This sounds extreme, but it’s unfortunately all-too common.
Mike tells Buttercup & Wesley that the agent never got back to him, & so it’s probably best to assume the worse-case scenario: the sellers aren’t offering any buyer-agency compensation. The buyers decide to cancel their appointment to focus on properties where they would have a little more financial flexibility.
Maybe the sellers of the black house were planning on offering 3%, but Realtor Buster ruined that chance for them by not communicating it upfront.
ADVICE FOR SELLERS:
First & foremost, hire a listing agent who:
• Has been attending trainings (plural)
• Can explain the new laws & what that means for the transaction.
• Is responsive
• Is cooperative
• Is an excellent communicator
Then, decide if you want to offer any buyer-agency compensation with your listing. Ask yourself: “Am I hurting my chances of the house getting shown if I don’t offer any buyer-agency compensation?” This is just one additional item on the list of incentives that you can offer to attract buyers & bring as much attention to your property as possible?
There’s no right or wrong answer. That’s for you to discuss with your responsive, educated & experienced Realtor.
ADVICE FOR BUYERS:
First & foremost, hire a buyer’s agent who:
• Has been attending trainings (plural)
• Can explain the new laws & what that means for the transaction.
• Is responsive
• Is cooperative
• Is an excellent communicator
Then, run numbers with your lender & Realtor to ensure that you’re budgeting in your buyers-agent compensation. Be prepared & get a good grip on understanding your closing costs. Be honest with your Realtor as to which scenarios would put you in a financial pinch.
There’s no right or wrong answer. That’s for you to discuss with your responsive, educated & experienced Realtor.
ADVICE FOR REALTORS:
First & foremost, be an agent who:
• Attends trainings (plural)
• Can explain the new laws & what that means for your client’s transaction.
• Is responsive
• Is cooperative
• Is an excellent communicator
WORKING THE RIGHT WAY
I know that if a Realtor isn’t this type of Realtor right now, this push isn’t going to get them there. There were ALWAYS documents to be presented to buyers before showing homes, this is not new.
The best Realtors were already in the practice of working this way. Since 2007, my team has ALWAYS presented the Consumer Notice & Broker Agency Agreement to our buyers before showing homes. We’ve never shied away from paperwork or being upfront about how we get paid. We’ve been working this way almost 20 years before it was even required.
An excellent Realtor is one that will work the right way even when the law doesn’t force them to.
I’m Always Here & Happy to Help!

Katina Hunter
Team Lead for the Katina Hunter Team with Coldwell Banker
724-888-9020
Katina.Hunter@PittsburghMoves.com