Real Estate • June 5, 2024

Why Buyer Representation Matters So Much to Sellers

by Windermere MI

Why Does Buyer Representation Matter to Sellers?

In today’s rapidly changing real estate landscape, understanding the critical role of buyer representation has never been more essential for home sellers. With the pending NAR settlement on the horizon, many sellers may not fully grasp the significant impact these changes will have on their transactions. The urgency to adapt is real, and overlooking the necessity of paying a buyer agent compensation could expose sellers to unforeseen risks.

Currently, home buyers are not allowed to roll their buyer agent compensation into their loan. This means they must bring cash to the table to pay their agent (if the seller is not offering buyer agent compensation).

Unrepresented buyers should be considered more than a minor hiccup—it can lead to a cascade of complications that jeopardize the entire deal. To safeguard your investment and ensure a smooth transaction, it’s crucial to recognize the invaluable support a buyer’s agent provides.

What value does a seller receive if the buyer has professional representation? Let us list the ways:

Lender Connections: Buyer agents connect their buyers with well-vetted (and typically local) lender partners who have proven time and again that they can close a transaction, and on time.

Documentation Management: Buyer agents ensure that buyers have delivered all necessary documentation to the lender to ensure full underwriting.

Market Analysis: Buyer agents provide comparable market analysis reports (CMAs) to help buyers understand the market value of the home and support a reasonable offer price.

Contract Guidance: Buyer agents guide their clients through the purchase and sale agreement, ensuring that they understand the terms and conditions and their ability to fulfill their commitments.

Contingency Explanation: Buyer agents explain all contingencies to buyers, ensuring they understand the risks and rewards, especially when waiving contingencies.

Earnest Money Handling: Buyer agents ensure that earnest money funds are delivered to escrow on time.

Transaction Deadlines: Buyer agents ensure that their client and their lender observe and adhere to all deadlines to keep the transaction flowing smoothly and closing on time.

Inspection Access: Buyer agents provide access to home inspectors and help their buyers understand the reports. This is critical as most MLS associations require an agent to be present whenever a door is opened. If the buyer doesn’t have representation, the listing agent must give access, exposing them to inspection findings and forcing them to disclose on behalf of the seller.

Appraisal Assistance: Buyer agents give access to appraisers and typically provide reports of comparable properties to support the purchase price, ensuring the property appraises at value.

Negotiation Support: If the appraisal report comes in less than the purchase price, the buyer agent will help negotiate and collaborate with the listing agent to ensure a mutual agreement is reached by all parties.

Transaction Coordination: Most importantly, the buyer agent helps keep their client and all parties on track to ensure closing, and crucially, on time.

The value a buyer agent brings to the transaction is indispensable. Their expertise not only facilitates a smoother process but also protects all parties involved from potential pitfalls. By ensuring the buyer has professional representation, sellers can avoid significant risks and secure a successful transaction. In the evolving real estate market, investing in buyer agent compensation is a wise decision that benefits everyone involved.

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative, and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

This article originally appeared on the Windermere blog on 5/29/24 & Inman News on 5/21/24.

Real Estate • December 5, 2023

2024 Buyer Agency Law Changes: What Every Buyer Should Know

by Windermere MI

The Law Change Every Home Buyer Should Know About

Maybe you’ve heard about the class action lawsuits in other states, or maybe you’ve clicked a link discussing how REALTORs^® conspired to artificially inflate home prices through price fixing of commissions. What you probably haven’t seen is that in Washington our REALTORs^® and our NWMLS have been actively working to make the real estate marketplace more transparent and consumer friendly since 2019. Through our requests of the legislature Real Estate Agency Law is changing on January 1, 2024. It will significantly affect how you, the consumer, engage a real estate broker among other things. If you’re thinking about buying a home in the Seattle area ever again, read this.

Washington was among the first states in the country to adopt buyer agency in the late 90’s. Before this ground-breaking consumer protection, all agents were considered agents of the seller; if a buyer was working with a real estate professional, that person wasn’t a “buyer’s broker” but rather a “sub-agent” for the seller. Under current law, all agents are agents for the buyer unless there’s an agreement to the contrary. An agency relationship is created the moment you ask, “how is the market?” or an agent hands you a business card. That means that almost immediately as a home buyer you have protections afforded to you by the law of our state. An agent only becomes an agent for the seller through written agreement.

Somewhere along the way (and there are lots of possible explanations for this, practical rather than nefarious), written agreements between buyers and their brokers were deemed unimportant. Very few practitioners have these agreements signed by their clients, even though they are encouraged to do so. The law automatically protects both parties and the seller sets the compensation, so it was a pretty natural path: focus on the other 1,000 things you need to educate the consumer on instead of discussing such gauche topics as how we generate revenue as business people. AKA: how we feed our families. AKA: what does buying a home truly cost.

The law is being updated to become even more consumer friendly and that means an important change: If you are a home buyer shopping for a home you must sign a “brokerage services agreement” with your broker after January 1, 2024. This agreement must discuss the fee that your broker will charge and where that money will come from. It’s a wonderfully positive change that we as Washington REALTORs^® lobbied for in Olympia in January 2023 (our owner, Rachel Mehmedagic, was there!). REALTORs^® asked for more regulation on themselves. This will take us to a higher level of professionalism, bring it on! If your broker doesn’t ask you to sign an agreement, they are not up to date on what is going on in their industry. Start shopping for a new broker.

The NWMLS has created a form for all members to use, but that is not the only form that you may be presented with. Be careful to read what you’re signing. Ask questions. Be a diligent consumer. Demand professionalism from your broker. We will rise to the occasion, we’re confident of this.

For more on what the NWMLS has done to stay ahead of the national conversation: https://www.nwmls.com/northwest-mlss-members-provide-buyers-and-sellers-with-choices-control-and-complete-transparency/. This is not the only change to Agency Law, just the one piece of what we wanted to discuss today. To read the new law: https://app.leg.wa.gov/rcw/default.aspx?cite=18.86 or see the line-item changes here.