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NAR Settlement Facts: Buyer Agency Agreement

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Effective August 17, 2024, all Buyers who want to work with a REALTOR (don’t go unrepresented!) must first sign a “Buyer Agency Agreement.” This must happen before asking an Agent to show you a home!

The Buyer Agency Agreement (BAA) outlines the relationship between the Agent and the Buyer including compensation to the Agent for working on behalf of the Buyer.

View the KW Ohio Buyer Representation Agreement below!

How much is the compensation? This is determined by the Buyer and their Agent. In the past, a Buyer’s Agent earned on average 2.5% on the sale price of a home (there never was a fixed rate). Most real estate Agents – especially those who have been in business for a long time and have tons of experience – will expect to be compensated much in the same way as they were before.

Who pays for the Buyer’s Agent compensation? Technically, you do! – the Buyer is responsible for their Agent’s compensation. Previously, the compensation came from the Listing Agent who shared a portion of their compensation with an Agent who brought a Buyer. While this is still permitted, it can no longer be advertised in the MLS.

Since a Buyer’s Agent will not be able to know in advance what the compensation is being offered by the Seller, if any, they will need to be sure to have an agreement with the Buyer upfront ensuring they will be paid.

The compensation can come from any of these sources –

  • Ask the Seller to pay it as a part of the Purchase Agreement;
  • Pay it out of your own funds at closing;
  • Add it to the sale price and have it paid to the Agent at closing.

One other way to pay a Buyer’s Agent is to ask if the Seller has already agreed to pay a Buyer’s Agent. In this case, the Agent can receive compensation directly from the Seller. If the amount is less than what you agreed on in the BAA, you will need to pay the difference. If the amount is greater, your Agent can only collect the amount you agreed on in the BAA.

Have questions? Send your questions by text regarding the NAR settlement or other real estate related questions.

Text a Question to lisa

Discover more from LISA TIMKO | Cleveland REALTOR | Columbus REALTOR | KELLER WILLIAMS

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