Real Estate's New Reality-Update 1/2025

 What has and has not happened since? Well, as I mentioned at the end of Part 3 what was out west is now here, at least at our local area (Central Virginia).

Recently our Association chose to remove any language from a listing agreement regarding the offering of Buyer's Agent compensation upfront. Which actually makes our jobs a little bit easier but a little harder on buyers, especially those on a tight budget. You don't know prior to making an offer if any of your agent's compensation will be paid. It is now fully and completely negotiable within the contract between buyer and seller.

**Side Note** A brokerage may allow their seller to offer compensation ahead of time, it's not currently illegal. They would need to write that language in themselves or provide a different contract/addendum. Our Association chose to remove it from their standard forms as a best practice. The whole point of the lawsuits and DOJ's intentions was to remove broker to broker compensation and keep it strictly between buyer and seller.

How does that affect you? As a buyer you will sign a contract with your agent as to the amount of their compensation and you will be on the hook for that amount. When you make an offer on a property there is a line that allows you to ask the seller to pay all or part of that compensation. It is negotiable the same as price, closing date etc. As a seller you will not see anything regarding buyer's agent compensation on the listing agreement between you and your agent (see side note above), but be fully prepared to see it asked for by the buyer on their offer. As mentioned above it is negotiable and you can accept it, reject it, or negotiate.

Is this a good thing or a bad thing? Well as with most things it depends which side you are on. For the agent, on either side, it is, in my opinion, a good thing. We no longer have to make phone calls and get paperwork signed ahead of time that may or may not even be needed. Plus it falls in line with what ODJ was trying to accomplish and may help to keep brokers out of real estate jail, so to speak. For the seller it's also a good thing in that you can use that to get a better deal. You have the option to negotiate that number if you want to. If you offer a number up front, that may actually be a higher number than what is in a Buyer's Agent Agreement and you just offered to pay more than what the buyer is paying their agent. For the buyer it's not a great thing but it's also not a horrible thing. It's not great in that if you are relying on a seller to pay what you agreed to pay your agent, you may not get that. When you sign a Buyer's Agency Agreement, you need to be prepared to pay that amount in case the seller does not, or you may lose the home you just put an offer on. There is the possibility that the seller may agree to a portion but not all of that amount, so just be prepared. On the flip side of that it's not horrible if you have some cash in the bank. What I mean by that is that there are a lot of young or first time home buyers that do not have much cash and will rely on the seller to pay their agent. If you have the cash you can be in a more competitive place if you do not need to ask the seller for that compensation.

What's coming up? Man, I wish my crystal ball was clearer. Back in part 3 I predicted that the pendulum would swing back to the buyer's advantage, and I still do, but now I think that may take longer. With our new administration in the White House (and this is not a political post, don't go there), I don't believe that it's on the top of their agenda.

There's no doubt about it, buyer's have it tough. Prices are through the roof, you need more savings and a higher income than before, we're still facing a nationwide housing shortage, and it's already in January looking like it's going to be a booming spring market.

Lastly, we recently spent the morning at our state's capitol for lobbying week and heard that one of the bills that is being proposed is to codify the rule regarding Buyer's Agency Agreements. You currently need one signed to view a property with an agent, but it's a rule, not a law. It won't be a big change for the public if it goes through. There are also several real estate related bill up for proposal, so just a reminder to get involved and at the very least, vote!