With a comprehensive compensation plan, you can not only comply with new buyer representation regulations but also ensure you have your check in hand, writes Cassie Walker Johnson.
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The August 17 deadline has arrived and agents are scrambling to update their systems and processes to comply with the new buyer agreement requirements.
But here’s the thing: Even with a signed buyer’s agreement in hand, agents may find themselves empty-handed unless they also have a solid compensation plan in place.
The buyer’s agreement will detail your compensation rate, but may not detail how you actually get paid. What if the seller doesn’t offer an offer? What if the buyer doesn’t have the funds to pay you?
Until Freddie Mac and Fannie Mae update regulations to allow buyer agent compensation to be included in buyer loans, it is critical to have a compensation plan in place to ensure you are paid for your hard work.
As I talked about on Inman Connect Las Vegas’ agent task force, this is a complex issue that requires careful planning and execution with customer service to get the results you want.
Working with your buyer to draft this plan before showing the home will ensure that your buyer is prepared and that you are in full agreement when the offer is written.
Steps to Create a Rock-Solid Compensation Plan
Step One: Determine “Home”
Once you find “the house,” contact the listing agent and ask if the seller is offering any concessions or compensation to cover the Buyer’s Agent Compensation (BAC).
Step 2: Draft a quote
When drafting your quote, please include the BAC fee agreed in the buyer’s agreement. From here, several scenarios may arise:
- Scene one: The seller accepts your terms and both parties agree.
- Scenario B: The seller fought back with a lower rate than agreed upon in the buyer’s agreement. Work with your buyer to decide whether to reject the counter or accept it and make up the difference.
- Scenario C: The seller rejects the claim for compensation and the buyer must decide whether to pay the BAC in full or abandon the offer.
Explore payment options
If the buyer needs to pay the full BAC, there are several options to secure the funds:
- Down payment adjustment: The buyer can use part of the down payment to cover costs.
- Checkout fees: Discuss with your lender the possibility of including the BAC in closing costs and increasing the purchase price to make up the difference (subject to appraisal).
No matter who ends up paying the buyer’s agent compensation fee, the key is to work together to make sure the fees are paid and, most importantly, that your buyer gets their dream home.
remember this
With a comprehensive compensation plan that addresses all the “what ifs” in the deal, you can not only comply with the new regulations, but also ensure you have a check in hand. So take the time to develop this plan and set yourself up for success in this new era of buyer agreements.
Cassie Walker Johnson is the managing broker of Windermere Real Estate. Connect with her on Instagram and LinkedIn.
