FHA Still Allows Sellers to Pay Buyer Agent Fees
On March 15, 2024, the National Association of Realtors (NAR) changed the rules for how more than 1 million real estate agents are paid in America. The new rules go into effect in mid-July 2024. CLICK HERE to view NAR's FAQ page. The main impact this has on agents in the near term is that sellers will no longer be allowed to offer compensation to the buyer's agents through the MLS. However, sellers can still offer compensation to a buyer's agent outside the MLS. On March 28, 2024, the Federal Housing Administration (FHA) issued guidance saying that buyer agent fees paid by sellers will not count toward interested party contributions (IPCs). Here's how that may impact you:
WHAT ARE "INTERESTED PARTY CONTRIBUTIONS"?
Sellers are allowed to contribute up to 6% of the sales price toward a buyer's closing costs when the buyer is financing the home purchase with an FHA-insured loan. This is known as "seller-paid closing costs," or "seller concessions," or "interested party contributions." This reduces the upfront cash buyers must bring to closing, making the home purchase more affordable.
BUYER'S AGENT FEES SHOULD NOT BE INCLUDED WITH SELLER CONCESSIONS ON FHA-INSURED LOANS.
On a home purchase involving an FHA-insured loan, it's better NOT to include the buyer's agent fees paid by the seller as a seller concession. Instead, this should be treated as a separate line item in the purchase agreement. For example, "the seller agrees to pay x amount toward the buyer's closing costs, and x amount toward the buyer's agent fees." This may or may not be the case for conventional financing as Fannie Mae and Freddie Mac have not yet issued guidance on this topic. I'll keep you updated as things develop.
WHAT'S THE NEXT STEP?
Contact me to schedule a business planning session to evaluate how the new commission rules may impact your business. It's more important than ever to partner with a qualified mortgage professional. I can help ensure the seller concessions in your purchase or sale agreements are structured properly to comply with lender guidelines.
FHA allows the seller to contribute up to 6% of the sales price toward a buyer's closing costs (above and beyond seller-paid buyer-agent fees).
Source: Momentifi