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Do you need an agent to buy a home? Of course not. However, you don't know what you don't know - and that goes for internet, AI and other "advice" sites. The complexity and chaos of the home purchasing process has never been greater. There are more hurdles in buying a home than ever before, that’s simply the reality of the process.
The NAR Lawsuit Settlement
While Texas always required it, the settlement reinforces that a signed buyer/tenant representation agreement must be in place prior to agents showing homes. Also (as has always been the case in TX), it reminds all parties that compensation of both listing and buyer agents is optional and entirely up to the principles. The settlement reinforces this and adds additional transparency.
What home buyers in TX need to know:
* Home sellers are not required to offer compensation for a buyer’s agent
* Many multiple listing services (MLSs) will no longer include offers of buyer agent compensation
* Buyers and their agent will decide upon the level of compensation for the agent
* Buyers can request the seller pay compensation to their buyer's agent when an offer is written
* Buyers may be obligated to cover the difference if offered compensation is less than that agreed to in the buyer brokerage agreement
The fundamentals of buying and selling a home remain the same, the issue of compensation is simply becoming more transparent. The settlement reinforces what has always been in effect in TX, all offers of agent compensation are completely optional.
What is “Buyer Agency”?
Buyer agency is the highest level of representation afforded to a buyer by a real estate professional. When a buyer broker agreement is signed, a client relationship is formed and the real estate professional is required to represent and look out for the client’s interests at all times – as long as those interests are not illegal.
Why is This Valuable to Buyers?
The seller or builder of a property is represented by the “listing agent.” In negotiating price and terms, the seller has an advocate to represent their interests, but unless the purchaser has an executed buyer agency agreement with an agent, their interests are NOT represented.
What is Required for This Level of Representation?
A written and signed “buyer agency” agreement is required by Texas law and after 8/17/24 as part of the NAR settlement.
What Does a Buyer’s Agent Do?
Clients are afforded a much higher level of service and protection than when going it alone and letting the listing agent run the transaction. The buyer’s agent will analyze information such as comparative market data, advise during negotiations and write the purchase agreement. In general, they act as the client’s advocate during the purchase process. See what a buyer's agent does by clicking here.
What if There is No Buyer Agent?
If there is no signed buyer broker agreement, the buyer is unrepresented. The listing agent is required by law to represent the interests of the seller – including in new construction purchases. Sellers and builders don’t lower the price of a home just because a buyer is unrepresented. Test that - tell the builder's/listing agent to write in a stipulation providing a credit equal to the amount of what the buyer agent commission would be. The internet of course says otherwise but why would a seller not secure the highest price and best terms possible?
How Much Does Buyer Agency Cost?
Recent (2023/2024) lawsuits and projected settlements surround transparency of listing and buyer broker fees. In TX, compensation has always been fully negotiable, there are no set fees. Buyer agent fees are negotiated between the agent and the buyer. Since buyer brokerage compensation is determined by the buyer broker agreement, sellers will not direct the amount of the buyer brokerage compensation to be paid. Sellers may still offer to pay the buyer’s brokerage, but they are not required to do so.
Buyer brokerage compensation may be paid in one of the following ways:
• Paid directly by the buyer
• Paid by the seller through the proceeds of the transaction, and included in the purchase price of the property
• Paid by both parties, as determined through negotiations
What are Buyer Responsibilities?
In this agreement, buyers agree to handle all real estate concerns through the agent. Buyers agree neither to seek real estate information nor to view or purchase any property without the buyer’s agent.
Why Would Someone Not Want Buyer’s Agent Representation?
A number of reasons. Some buyers feel competent to act unrepresented. They may feel money will be saved or that they can negotiate better terms. Some buyers may not feel an agent is "worth" it and some may simply not be able to pay them if necessary. Despite the changed environment, most home sellers continue to offer buyer agent compensation.
I Found the House I Want – Do I Still Need a Buyer’s Agent?
Finding a house is only one part of the process. An experienced buyer’s agent will complete tasks that buyers don't know about. They are skilled at the key steps (contracts/negotiation/inspection/appraisal/etc) and address the unexpected things that always pop up. Finding a home is jut one of many hurdles. Buying a home is a major event with major financial ramifications – positive as well as negative. Take the time to understand the process and the importance of working with an experienced realtor who has your best interest.