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Borrower Agent Compensation Strategies: 5 Ways

Navigating Buyer Agent Agreements and Compensation:

As the real estate landscape evolves, the recent NAR settlement has introduced new dynamics in how buyer agents are compensated. This presentation aims to educate buyer agents on innovative strategies to cover these costs effectively. By understanding these options, agents can help buyers can make informed decisions and can better assist their clients in navigating these changes. These five creative compensation structures will help you adapt to the new norms and ensure a smooth home-buying process.

1. Seller Compensates Both Agents Equally (Same as prior to NAR Settlement)

  • Description: The seller agrees to compensate the listing agent and the buyer's agent individually
  • Key Point: This compensation structure must be disclosed to both parties. Unlike previous practices, it clarifies that the seller is paying both agents directly.

 

2. Buyer Reduces Down Payment to Pay Buyer's Agent Commission (Finance in Mortgage Balance)

  • Description: The buyer offers a fair purchase price but reduces their down payment by, using these funds to pay the buyer's agent commission.
  • Financing Adjustment: The buyer adjusts their financing to allocate funds for the agent's commission from their down payment.

 

3. Buyer Increases Purchase Price to Cover Buyer's Agent Commission (Built into Purchase Price)

  • Description: The buyer increases the offer price and requests that the seller pay this increased amount as the buyer agent's commission.
  • Mechanism: The increased purchase price covers the buyer's agent's commission, effectively transferring the cost to the seller through the transaction.


4. Buyer Pays Buyer's Agent Compensation in Cash

  • Description: The buyer agent negotiates the best purchase price and pays their agent's commission in additional funds to close.
  • Buyer's Action: The buyer directly compensates the buyer's agent without increasing the transaction amount.


5. Seller Compensates Listing Agent and Partial Buyer Agent (Blended Option)

  • Description: The seller pays the listing agent's full compensation and only a potion of the buyers agents agreed upon compensation.
  • Buyer's Responsibility: The buyer signs a Buyer Broker Agreement agreeing to a total commission for their agent. The buyer covers the remaining difference.
  • Payment Method: We will use the higher purchase price in this example.

 

Implementation Considerations

  • Transparency: Ensure all parties know and agree to the compensation structure.
  • Documentation: Clearly outline the agreed compensation method in the Buyer Broker Agreement and other transaction documents.
  • Compliance: Adhere to the new NAR rules and local real estate regulations.
  • Education: Inform clients about these options to help them make informed decisions and understand their financial commitments.

Buyers' agents can navigate the new NAR settlement rules effectively by integrating these compensation methods while maintaining transaction integrity and client satisfaction.

Reviews

"Very easy to work with, great communication, very helpful with any questions we had as first time home buyers. Will highly recommend Noel and his team to anyone interested in buying a house!!!!!!"

aaron m

"Everyone is so nice. They try everything they can and do as much as they can for the people trying to buy a home. I am a first time home buyer and knew little about this and Noel was happy to answer all of my questions. Also the app was so nice to have! It made uploading documents super easy. Being able to e-sign for just about everything also was great. We will definitely be using Noel and his team again for any future purchases!!"

alexus o

"It was great because Noel communicated very well! He went above and beyond to help us get everything done in this process."

skyler p

"Noel and his team have been so absolutely incredible! Knowledgeable, patient, understanding, and very willing to help. We ran into some sticky situations and Noel really helped us figure things out. I can tell he truly cares and wants what's best for me and is willing to help me achieve that."

aloura t

"Noel was always available and quick to respond and made it clear on explanation of the loan and provided different options.. he was so friendly , great person and his staff ; Darcy was also friendly, emailing and making sure we got everything in. Overall we had a really great experience . I’m so thankful and appreciate everything you did for us.. thank you so much !!!"

tamara s

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andre l

"Noel and Darcy were amazing to work with. Very responsive to our questions and made the entire process very smooth. We had zero issues at closing and everything was perfectly in order. Highly recommend Noel and Darcy to anyone that may be looking for a mortgage lender."

jordan h

"Noel was very quick to respond with questions and concerns. He and his team had great customer service with a main focus on helping us. Noel was very thorough with his information and explanation of documents and information sent over."

megan h

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