Buyer’s Brokers are Coming! August 17th is the Date.
Perhaps you have heard that the National Association of Realtors (NAR) has entered into an agreement to resolve a lawsuit about commissions. The gist of the agreement going forward is that buyers for NAR member listings will be required to sign a listing agreement (or sign an opt-out) for their own representation separate from the listing agent; beginning August 17th. That way, both the seller and buyer will have their own agent with Fiduciary Responsibility to them and them alone.
You may have never heard of NAR and indeed NAR doesn’t have a strong presence in New York City, but the Real Estate Board of New York (REBNY) is going to abide by the same buyer’s broker rule change. Almost all agents in Manhattan and Brooklyn are REBNY, as am I, but most Queens agents are not. The real estate group with the greatest presence in Queens is the Long Island Board Of Realtors (LIBOR) which is associated with NAR as well. LIBOR will be following the same rules as NAR in requiring buyer’s broker agreements in place before bidding on listings, starting August 17th.
There are brokerages in Forest Hills and the rest of Queens that aren’t a part of either organization (REBNY or LIBOR) and aren’t subject to the same rules and may, or may not, choose to abide by them. They are more likely to not abide by them and continue to represent the seller in their listings and present offers from bidders who without a buyer’s broker agreement in place, with the assumption that all commission is paid from the seller.
I referenced this being a resolution to commission dispute earlier and the idea of having buyers sign agreements for their own representation is for buyers to potentially pay their own agent’s commission. As an example, the listing price may, or may not include commission for the buyer’s broker. Members of REBNY and LIBOR most likely will include commission for the buyer’s in their listing price, but it is not required.
How it is most likely to pan out is that the buyer’s broker will connect with the listing broker and find out if there is commission being offered from the seller. If not, the buyer must consider what price to offer to the seller knowing that the buyer must also compensate their buyer’s broker themselves. The buyer’s broker agreement does include a promise to compensate the buyer’s broker should the seller not include compensation for the buyer’s broker in the listing. On Long Island, many brokers have been working that way for some time.
To bring this together, if you are a buyer, you will definitely be asked to sign some form of buyer’s broker agreement (for individual listing, or for any listing) or acknowledge you are opting out if you are looking in Manhattan or Brooklyn, and you could possibly be asked to sign one if you are looking in Queens. If you are selling your home, you will have to option to not include any commission for any buyer’s agent if you choose to. There are advantages and disadvantages on both sides.
If you have any questions, please don’t hesitate to ask.
