Cooperative Compensation are the key words here. Open negotiations and transparency are already yesterday's news.
If you're new to this discussion, NAR (National Association of Realtors) was sued for nearly half a billion dollars for stifling real estate negotiations in buying homes. Some big-time real estate brokers like Berkshire Hathaway were similarly sued.
I already contended that this is going to hurt buyers/sellers more than realtors. Currently, a lot of buyer agents are already requiring a fee just to get started showing property.
Jason Mitchell from the nation's largest real estate brokerage brought out at least three main points I have already been pondering. If you decide to listen, look for these three points.
1. Buyer agents won't bring qualified buyers to a seller without a seller's cooperative compensation agreement. The buyer will most likely have to agree to pay the buyer's agent fee or require the seller to offer a cooperative compensation. Imagine a buyer agent requesting much more than 3% to bring a qualified offer to the table. Watch the greed....
If the seller says no, the buyer's agent already has a signed agreement to only show homes offering cooperative compensation.
2. First time home buyers who need to sign a buyer's fee agreement will all but be shut out, or shell out 2-1/2 to 3% themselves. That's almost the amount of an FHA downpayment.
3. Buyer's agents will be looking at lenders to help finance this fee. Keep in mind a buyer's agent fee will typically be more than a loan origination fee. It's interesting to see and hear Jason's panic in this regard. PANIC!
As a mortgage broker I disagree with The Mortgage Coach's comments that, yeah, we'll come to the rescue and bail out the buyer by financing the buyer's agent fee. I don't think so! Closing costs on new home purchases are usually taken right to the wire.
It will also be interesting to see what the government will step in with.
http://www.youtube.com/watch?v=4KMJDQ9gPWE
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