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With less than 24 hours to go before widespread implementation of the National Association of Realtors’ settlement provisions, real estate agents are nervous as they enter uncharted territory. Will sellers continue to offer commissions? If not, are homebuyers prepared to incur additional compensation costs while mortgage rates and home prices rise? Will consumers shun buyer’s agents in favor of dual agency transactions?
Glenn Kelman | Photo Credit: Redfin
While the industry must wait for answers to these questions, Redfin CEO Glenn Kelman wrote a brief blog post on Thursday, “Change is Good,” focusing on what the rule changes mean for agents and consumers direct impact on the person.
“Every market has different rules and it depends on each market [multiple listing service’s] An explanation of the requirements set by the National Association of Realtors,” he said. “These rules should make real estate fees more transparent and competitive, a goal Redfin has been advocating for.”
Kelman outlined five changes Redfin is making to comply with new regulations, which stipulate that listing agents cannot offer compensation for cooperation on the MLS and require buyer’s agents to sign a written agreement before taking home buyers for a tour.
Kelman said homebuyers interested in working with a Redfin agent must sign a fee agreement before their first tour. When a home buyer asks to see the home, the fee agreement is revealed and they can sign it with one click. Like many short-term agreements that have emerged since NAR proposed the settlement in March, the agreement does not specifically bind homebuyers to Redfin agents.
“[The fee agreement] It exists solely to set the maximum amount that Redfin can charge as a buyer’s agent,” he said. “Typically, the seller pays this fee out of the proceeds of the sale.”
If homebuyers want to continue working with a Redfin agent, they will need to sign a second binding buyer’s agency agreement. Kelman said homebuyers will receive the agreement after their first tour; however, the agreement is optional. Still, they recommend homebuyers sign a buyer’s agent agreement before a second tour and take advantage of the brokerage’s “Sign and Save” discount program.
“Unless required by law, an agreement is optional and your Redfin agent can host further tours with you without an agreement,” he said. “But signing this agreement before your second visit can Our commission is reduced to 0.25% of the home value.”
“Our goal is simply to identify which customers want our agents to follow up and register, and which customers just want to be left alone,” he added. “You may sign our agreement and cancel it later by sending an email to your agent indicating that you wish to cancel.”
Kelman went on to explain Redfin’s buyer’s agent fees, the options consumers have in deciding which party pays the fees and when.
“Our buyer’s agent fees vary by market and are very competitive. We set our fees according to the market,” he said. “At least for clients who sign a simplified buyer’s agency agreement, our goal is to offer lower prices than approximately 80 percent of our competitors.”
“We can still provide the best service at this price because by pairing Redfin.com customers with Redfin agents, we avoid the main cost of being a traditional agent, which is finding new customers,” he added. “…our agents’ expertise and our low fees serve the same purpose, which is to give you the best chance of winning your dream home. If you’re competing against other buyers, because of our lower fees , sellers can make thousands more dollars off your offer.
If the seller refuses to pay the buyer’s agent’s fee, Redfin doesn’t expect the buyer to pay the fee before the sale, Kelman said. “When we submit a quote, it includes our fees, which are deducted from the sales proceeds,” he said. “If the seller is unwilling to pay our fee, we will negotiate as we would any other offer terms.”
Kelman also reminds home sellers of their options, noting that they can agree in advance to pay a buyer’s agent fee. The fee can be a specific percentage (e.g., 1% or 3%) or a dollar amount (e.g., $10,000), or they can say they will pay a negotiable fee. Either way, fee quotes must be made outside of the MLS due to settlement rules.
“Your Redfin agent will tell you how to navigate the competitive dynamics of the market so that you can appeal to the widest range of buyers while still maximizing the net proceeds of the sale,” he says. “We can also work with you to bring Your home is sold directly to buyers who don’t want to hire their own agent, so you only pay one agent instead of two.”
Kelman concluded his post by reminding consumers to maintain an open dialogue with their agents and ask as many questions as possible about the changes.
“The new rules are designed to benefit you, and the policies Redfin has put in place around these rules should benefit you even more,” he said. “If you have questions about industry rules or Redfin policies, you can ask your Redfin agent!”
Email Marianne McPherson
