As of August 17, 2024, significant changes have been made to the way buyer’s agents are compensated in real estate transactions, following a recent settlement by the National Association of Realtors (NAR). At Kim and Lin Logan Real Estate, we believe it’s essential for our clients to understand these changes and how they may impact their home buying experience.
We are committed to guiding our clients through these changes, ensuring that they fully understand the implications and can make informed decisions. We believe that knowledge is power, and we are here to provide the necessary support and advice to help our clients navigate the evolving real estate landscape with confidence.
As these changes continue to unfold, it’s important to stay updated on how they may affect your specific situation. Our team is dedicated to helping you understand what to expect and how to best approach your home buying journey under the new regulations. Learn how these changes could affect your home buying experience and what to expect moving forward.

The Traditional Model: A Brief Overview

In the traditional real estate model, the seller of a property and their agent typically agree on a commission rate—usually a percentage of the property’s sale price. This commission is then split between the seller’s agent and the buyer’s agent. For example, if a property sells for $500,000 with a 6% total commission, the seller’s agent and the buyer’s agent might each receive 3% of the sale price.
 
This model made it relatively straightforward for buyers, as they didn’t have to directly handle their agent’s commission; it was covered out of the seller’s proceeds from the sale. However, recent regulatory changes have shifted this paradigm.
 

Shifting Responsibility: What the New Law Means

The new regulations now require buyers to take on the responsibility of compensating their buyer’s agent directly. This change means that before a buyer’s agent can represent a buyer, they must now have a signed buyer agency agreement outlining the terms of their compensation.
 
The new Buyer/Broker Compensation law primarily addresses how compensation is handled in transactions where buyers are represented by brokers. Traditionally, the seller’s agent would often cover the buyer’s broker commission, which was typically disclosed in the listing agreement and ultimately factored into the sale price. The new law aims to increase transparency and shift the responsibility of compensation negotiations more directly onto the buyer and their broker.
 
Under this legislation, brokers are now required to clearly outline their compensation terms in their agreements with buyers. This ensures that buyers are fully aware of their financial commitments and can make more informed decisions about their representation. Additionally, it prohibits brokers from receiving compensation unless they have a formal agreement with their client, thus reinforcing the need for written agreements in all transactions.
 

Understanding Buyer Responsibility

With this new approach, buyers will need to be prepared to handle their agent’s commission directly. This shift aims to increase transparency in transactions and ensure that buyers are fully aware of and agree to the compensation terms before entering into any agreement.
 

Negotiating Commission Rates

Despite the shift in responsibility, there’s still room for negotiation. Buyers can negotiate with the seller’s agent regarding the commission split. For instance, while the new law requires buyers to cover their agent’s commission, buyers and sellers can discuss how the total commission is split, potentially influencing the overall cost.
 

Typical Commission Structure

Typically, real estate commissions range from 5-6% of the sale price of the property. In the traditional model, this amount was divided between the buyer’s and seller’s agents. Under the new regulations, buyers will negotiate and agree upon their agent’s commission rate directly, which will then be reflected in the buyer’s costs.
 

How Kim and Lin Logan Real Estate Is Adapting

At Kim and Lin Logan Real Estate, we are committed to transparency and client satisfaction. Here’s how we are adapting to the new Buyer/Broker Compensation law:
 
Clear Communication: We will clearly explain the new compensation structure and how it impacts your real estate transactions. Our goal is to ensure you understand all financial aspects before you begin your property search.
 
Detailed Agreements: We will provide detailed buyer agency agreements that outline the terms of compensation and the services we offer. This helps to ensure that there are no surprises and that you are fully informed.
 
Negotiation Support: We will assist you in negotiating the best possible terms with the seller’s agent, helping to balance the commission split and ensure that you get the most value from your transaction.
 
As the real estate industry evolves, Kim and Lin Logan Real Estate remains dedicated to providing exceptional service and support. We believe that the new Buyer/Broker Compensation law will lead to a more transparent and equitable process for buyers and agents alike.
 
If you have any questions about how these changes might affect you or if you need assistance with your real estate needs, please contact us. We’re here to guide you through every step of your home buying journey.