In light of the recent NAR settlement, it is important to revisit why buyer agency started in the first place.
It started because of another class action lawsuit back in the early 1990s.
Buyers and sellers sued Edina Realty in Minnesota because buyers were working with agents in their firm on the purchase while other agents in the firm listed the property. Today, this is what we call “Dual Agency”. At that time there was no buyer agency. The agent working with the buyer in that situation was technically a “Subagent to the Seller.”
The issue in this case was there were no rules for buyer agents and disclosure was not happening to explain how representation worked with both buyers and sellers. Yes, this was a hot mess.
The result was that Edina Realty paid out a lot money and Buyer Agency laws went into effect state by state all over the country to ensure that buyers would be equally protected in a real estate transaction.
The current NAR settlement does not change buyer agency. What does change is how buyer agents will be compensated. Sellers can choose to offer a commission or offer closing costs to pay the buyer agents commission. If a seller does not offer any buyer agent compensation, buyers will need to pay for their agent. I do think that many sellers will choose not to offer any buyer agent compensation.
I am not the kind of person that sugar coats things. Things are going to change under this settlement and many buyers could choose to go it alone to save paying a commission. The worst thing that could happen is that we go full circle back to the early 1990s and problems start all over again because buyers are not represented. The difference here is that buyers would be making the choice but not really understanding the breath and depth of that decision.
A good buyers agent is a real estate consultant, a general contractor and a project manager. They are there to negotiate the best deal, make sure everything about the house is functioning properly, and to coach clients through the transaction and set their expectations every step of the way.
A good buyers agent will make your life easier throughout the process so that you can focus on your work and make the home buying process less stressful.
Don’t hesitate to contact me with your questions and comments.