I need to pay what?! What buyers need to pay their realtors in 2024

Last year, the National Association of Realtors, representing over 1.5 million real estate agents, was found guilty of colluding to keep home prices artificially high at the expense of both home buyers and sellers. As part of a landmark settlement, the real estate industry agreed to a few key business changes, most notably in how buyers will have to compensate their real estate agent. 

Before, when you bought a house, the seller shouldered the burden of paying both their agent and yours. Let's say you bought a $500,000 house. Traditionally, the seller pays their agent 3% ($15,000) and yours another 3% – a cool $30,000 in commissions.

Why did sellers pay for your agent? It's because NAR rules required sellers to advertise the "cooperative compensation" on the MLS, the internal database agents use. If sellers refused to pay your agent, or offered too little, guess what? Buyer's agents might "steer" their clients away from that house.

But this is all changing…

Under the terms of the settlement, buyers need to pay their realtors and are now required to come to specific terms with their agent on exactly how much they are going to get paid and real estate agents are no longer allowed to advertise cooperative compensation on the MLS. When this goes into effect in August 2024, if you are buying a house, you will be required to agree to pay your agent directly for services and sellers will no longer feel pressure to cover these fees. Let’s break down a few of the common questions we get…

‍So how much will buyers need to pay their realtors or real estate agent? 

After August 2024, buyers who want to use a real estate agent will have to come to an agreement with them on a specific price. Most agents will likely continue to charge the de facto standard commission of 3% of the sale price of the home. For a $500K home, this is $15K in additional costs that you will have to be prepared to pay upon closing in cash. 

What is a Buyer’s Representation Agreement? 

Before touring any homes, a real estate agent is going to have you sign a Buyer’s Representation Agreement. This agreement details exactly how much you will pay the agent if you close upon a home. Be sure to read these carefully as these are legally binding documents that might imply an exclusive relationship with that agent, meaning if you see a house with an agent after signing this agreement, you might owe them a commission if you ever purchase that home.  

A real estate agent is telling me we can get the seller to pay for this. Is this true? 

Some sellers might offer to cover fees as a concession, but remember, their incentive to offer it is much lower since agents are no longer allowed to advertise it on the MLS. In fact, we are already seeing sellers refuse to cover these fees. If you want to request the seller to cover your fees, your real estate agent can try to request these as a concession as part of your offer, but remember (1) this will make your offer less competitive compared to an offer that doesn’t include this request and (2) this may impact your ability to successfully get concessions for other things you want like rate buydowns, closing cost concessions, and warranties.  

Can I avoid paying these fees? 

You can avoid paying these fees by representing yourself in the transaction. At Shay, we make it easy for homebuyers to represent themselves in the transaction and give them all the guidance and tools to do so at a fraction of the cost. Instead of paying tens of thousands of dollars, we offer access to our platform for just $500 with a 30-day guarantee. Sign up here!