By Living Room Realty, January 18, 2024
Writing this at the (supposed) end of Portland’s cold spell that caused a lot of frozen/burst pipes, downed trees, slick roads and damage. It’s been a real shit show. So, first off, hoping everyone’s safe and doing ok.
On a secondary note, Real Estate also took a bit of a pause with the weather. I haven’t done a showing in 5 days. We had a listing that got pushed to next week. My work life has been real chill. Been watching a lot of horror movies. Exorcist: Believer was real meh.
We did, however write an offer on a home for a buyer. Almost immediately after sending it, we realized we forgot to have our buyer sign a buyer representation agreement. We’ve been working with this buyer for quite some time now, and it was the first offer we’ve written this year. For those not in the know, there have been some changes in the industry, with more onus being put on agents to have clients’ completely clear on where their commission comes from.
“Standard practice,” which I believe we’re not supposed to say anymore, is that the seller has paid both the listing (seller’s) agent and buyers’ agent. With lender fees, prorated taxes, and insurance, the buyer has their closing costs along with their downpayment for the home. In return, sellers have contributed portions of the sale price to pay commissions for both agents. Last year, the listing agreement form was changed to include the exact amount of the total commission would be offered to buyers’ agents.
This year, buyer representation agreements are becoming “standard practice” and required by many brokerages, LRR included. These agreements are similar to listing agreement, but for buyers’ and their agents, and have existed for a long time, but have rarely been used. These agreements not only outline a term for the buyer-broker relationship, but also states a buyers’ agent standard commission. This commission is typically stated as a percentage of sales price. The form says that when a seller offers BAC, that amount lessens the commission paid by the buyer. In a way it protects the buyer agent, who definitely does a lot of work. But in another way it convolutes who is responsible for what payment. If I normally get paid 2.5% for representing a buyer, and a seller and agent only 2.25%, for example, I would never ask one of my buyers to bridge that gap.
It does spark a much needed conversation. The past 7 years I’ve been telling my buyers that the best part of working with me on the buy side is that they don’t need to pay me, they just need to worry about paying for a house. I suppose that was never entirely true, as the source of the money always did come from the buyer, it was just how it was split up. It’s day 5 in the house, so those were my random thoughts.
Anyways, here’s a nice song that I’ve been listening to recently:
