How the New Real Estate Rules Impact Homebuyers & Sellers
On March 15, 2024, the National Association of Realtors (NAR) agreed to change 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. This means many real estate firms will change their compensation agreements throughout the spring/summer homebuying season. The main impact this has on home buyers and sellers is that sellers will no longer be allowed to offer compensation to the buyer's agents through the Multiple Listing Service (MLS). However, sellers are allowed to offer "seller concessions" through the MLS and compensation to a buyer's agent outside the MLS.
WHAT'S A "SELLER CONCESSION"?
A seller concession in the context of the new real estate rules is essentially an agreement by the seller to pay some of the buyer's total closing costs, including real estate fees and commissions. Lending guidelines generally allow home sellers to pay 3% - 6% of the home's value toward the buyer's closing costs, depending on the loan program. For example, suppose the property purchase price and appraised value is $500,000. In that case, the lender will allow the seller to contribute somewhere between $15,000 (3% of the value) and $30,000 (6% of the value) toward the buyer's total closing costs, depending on the loan program. These funds can be used to pay any closing cost listed on the closing disclosure, including fees to the buyer's real estate agent.
HOW DO BUYERS BENEFIT FROM SELLER CONCESSIONS?
Seller concessions reduce the upfront cash buyers must bring to closing. This makes properties with seller concessions much more affordable for buyers vs. properties without seller concessions.
HOW DO SELLERS BENEFIT FROM SELLER CONCESSIONS?
Seller concessions make your property more affordable to a wider pool of buyers. This increases your chance to sell your property in less time for a higher price.
WHAT'S THE NEXT STEP?
Contact me to schedule a brief 20-30-minute conversation to evaluate your options and how the new real estate rules may impact you. It's more important than ever to work with a qualified mortgage professional to ensure the seller concessions in your purchase or sale agreement are structured properly to comply with lender guidelines. I can also refer you to a qualified real estate agent to help with your home-buying or selling decision.
SELLER CONCESSION: An agreement by the seller to pay some of the buyer's total upfront closing costs.
Source: Momentifi