Commission Changes in Real Estate -
Part 2
The path to figuring out the momentous changes in real estate has become a little clearer. Or muddier.
@properties has provided us with four new forms - two for sellers and two for buyers.
The 2 new Seller forms include
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An entirely new Exclusive Sales and Market Brokerage Agreement (the listing agreement)
The new listing agreement has no reference to a "co-op" commission which has been eliminated. The commission discussion is limited to only the amount paid to the listing brokerage. Sellers will no longer be required to pay the buyer's brokerage a commission fee. Whether or not to offer a commission to the buyer's brokerage will be an important part of the listing agent's job and can be provided in the addendum at #2.
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A new form called a Compensation Addendum to the Listing Agreement
In these new forms, sellers may offer buyer broker compensation if they choose to. There is no legal requirement to do this and listing brokers will fully explain to sellers why it may (or may not) be advantageous,
The 2 new Buyer forms include
- A new Exclusive Buyer-Broker Representation Agreement (a binding contract between the buyer and broker.
There have been buyer-broker agreements for years but they were non-binding and seldom used. This new form is now lawfully required before showing properties to prospective buyers.
It sets out ways the buyer-broker will be compensated including a flat retainer fee or a percentage of the sale price.
- A new form called Compensation Addendum to the Purchase Contract
If the buyer can't pay their broker and the seller is not offering compensation, this form becomes part of the buyer's purchase contract. Buyers are asking the seller to pay a certain amount to their agent as part of their offer.
If all this seems confusing, know that millions of buyers, sellers, agents, and brokerages are coming to grips with this change. The situation is also described as "fluid" since more changes might come in November. There will be many unforeseen challenges and issues in the months to come.
Please see: What's Happening with Real Estate Commissions Part 1
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Margaret Goss is a full-time real estate broker since 1998 working in the North Shore communities of Winnetka, Wilmette, Kenilworth, Glencoe, Northfield, Glenview, and Evanston.
She can be reached at:
Phone: 847-977-6024
Email: margaret.goss@bairdwarner.com
See her full BIOGRAPHY
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