Et tu, NPR? New Rules for Real Estate Explained

Sometimes what you hear isn't the whole story.

NPR recently did a short piece on the outcome of a lawsuit that accused National Association of Realtors of not explaining to sellers why the sellers pay the buyer's agent.    

Most buyers cannot buy a house and pay their agent 2-3% of purchase price. That's why. And yes, having the seller pay the buyer's agent increases the price on a house but it also means the buyer has representation in a huge transaction that could easily go awry. Otherwise, the buyer has to ask the seller's agent to write the contract and negotiate for them. Good luck with that!

The truth is that most states have not had a buyer's agency agreement which states that the seller usually pays the buyer's agent but if they don't, the buyer is liable for their agent's fee. Colorado has had this agreement for years.

The only thing that changes in Colorado is that a buyer's agent has to contact the listing agent to find out how much the seller is contributing to the buyer's agent fee. That's because they are not allowed to state any compensation on the MLS though they can print it on marketing materials. Then we write it in to the contract or create an amendment or whatever is agreeable to the lender.

NPR said that sellers no longer need to pay a buyer's agent's fee so buyers have to deal with the listing agent. NOT TRUE!!!!

Buyer's agents are the ones bringing buyers to homes, providing them with information on neighborhoods, schools, inspectors, what price to offer, how to negotiate obstacles and inspection items. We spend hours talking over fears and concerns with our clients. And if the house or timing or whatever isn't right, we listen to our clients and act accordingly.

In Colorado, we have been telling our clients--whether a buyer or seller--for years how buyer's agents are paid. But some sellers will decide not to pay a buyer's agent. As a consequence, buyer's agents can't show their houses unless the buyer agrees to pay their agent. And that is not always possible.

Will this rule bring down home prices? Will it decrease the pool of buyers? Will it bring chaos and confusion to an already complicated transaction.

I don't have an answer yet to any of those questions but if you have questions, talk to your agent. Ask them how they are going to navigate these new rules and how will it affect you. Or give me a call and let's talk about it.

Meanwhile I'm going to send NPR a strongly-worded email!