What Home Buyers Should Know About Negotiating Real-Estate Agent Fees
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What is the main topic discussed in this episode?
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Here's your money briefing for Thursday, August 29th. I'm J.R. Whelan for The Wall Street Journal. Prospective homebuyers have a lot to deal with, like figuring out where they want to live. How much can they afford? What are the schools like in the neighborhood? Under new rules, if they're using a real estate agent, they'll also be doing the contract negotiating to work out commissions.
It's tricky because in our culture, in the U.S., we're generally not negotiators. And so this is something we definitely have to practice and get more comfortable with.
Wall Street Journal personal finance reporter Veronica Dagger will join us to go over what to keep in mind before you sit down at the negotiating table. That's after the break.
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What changed in the National Association of Realtors settlement that affects buyers?
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How will the new rules change when buyers must sign contracts with agents?
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The recent settlement reached by the National Association of Realtors means homebuyers are now responsible for negotiating fees with their agents. Wall Street Journal personal finance reporter Veronica Dagger joins me. Veronica, catch us up. What were the broad points of the settlement?
Well, because of this settlement, most home buyers are going to need to sign a binding contract with their real estate agent, which includes the agent's fee, even before they tore a property together. In the past, you might go around to see various homes with an agent and not have to sign anything, not have to talk about their commission, not have to decide that agent's commission or negotiate with that agent about their commission. And now most buyers from The jump, the second you wanna go see a house, you're going to most likely have to sign a very detailed piece of paper that says how much your agent will be paid, how they're gonna be paid, how long you're going to be working together. It's a legal document that folks usually didn't sign to the closing.
And so this is very different. And obviously the really big change is, In the past, buyer's agents were paid by the home seller, and how much that agent would be paid would be decided by the home seller. Now, because of the settlement, buyers decide, have to negotiate with their agent how much their agent will be paid, and that's a big change. Most times, buyers didn't have a whole lot of negotiating power at all in terms of working with agents, and now this is a big switch.
This was a landmark settlement and got a lot of attention. Yet in your reporting, you wrote that there's still some uncertainty. What is up for question?
Why are buyers now responsible for negotiating their agent’s commission rates?
These agreements in a wider scale rolled out about two weekends ago. And in general, it's unclear how much agents are going to be willing to negotiate their commission rate. It's also unclear if some of them are going to change the services they offer. Also, how long are you going to work together? Some agents will want to sign much longer contracts in terms of how long you work together are Other agents will only be willing to sign short-term touring agreements, which doesn't outline their commission potentially.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:00–1:28
2
What changed in the National Association of Realtors settlement that affects buyers?
1:28–1:48
3
How will the new rules change when buyers must sign contracts with agents?
1:48–3:41
4
Why are buyers now responsible for negotiating their agent’s commission rates?
3:41–6:55
5
What uncertainties remain about agents’ willingness to negotiate fees?
6:55–9:35
6
How can sellers still cover buyer-agent commissions and what does that mean for buyers?
9:35–9:59
Speakers
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