On March 15, 2024, the National Association of Realtors (NAR) and the Department of Justice (DOJ) reached a settlement regarding the business practices of real estate brokerages and consumers. The Settlement includes practice changes that took effect on Saturday, August 17, 2024.
How will this impact you as a potential real estate buyer on Maui (or anywhere in the United States)?
- The NAR settlement requires a written Buyer Agreement with a Buyer before visiting any property with a Realtor.
- The Buyer Agreement must specify the compensation between you, the prospective Buyer, and the agent representing you.
- No agreement will be required if you plan to represent yourself (you will be an unrepresented Buyer). However, if you are an unrepresented Buyer, it would be wise to confirm your status in writing with any agent before looking at one of their listings.
Important Things to Know and Discuss with Your Buyer’s Agent
- The Settlement Agreement does not preclude a Seller from offering a fee to a Buyer’s Agent. The settlement simply prevents Realtors from displaying cooperating compensation (fees paid to Buyer’s Agents) on any MLS.
- Part or all of your agreed compensation of your Buyer’s Agent may be covered by the Seller either via a commission payment or a credit of some dollar amount or percentage to you at the close of escrow. Credits from the seller can not be conditioned upon payment to the buyer’s broker.
- If you do enter into a Buyer Representation Agreement with a Realtor (which we strongly recommend), the agreement must specify the compensation that you agree to pay the Realtor if you purchase a property that meets the terms and conditions of the Buyer Representation Agreement.
- The compensation amount may be a specific dollar amount, a percentage of the purchase price, or an hourly rate. It cannot be “whatever the Seller is offering.” The compensation must be “Objectively ascertainable and not open-ended.” The document will also specify the geographic location, the types of properties, and the duration of the agreement.
- If the Seller is offering a Buyer’s Agent compensation that is less than you agreed to with your Realtor, you, as the Buyer, will be responsible for the part of our agreement that is not covered by the Seller.
- Your Buyer Representation Agreement can be as short as one day or as long as you agree to with your Realtor.
- Broker commissions are not set by law and are negotiable.
Other Things Buyers Should Know About The Settlement
If the Seller offers a Buyer’s Agent Compensation more than the Buyer and their Realtor have agreed to, the Buyer’s Agent may not accept this. Any extra amount provided by the Seller may either be credited back to the Seller or offered as a concession for other Buyer expenses.
An unrepresented Buyer may look at a home, or a Buyer may elect to see it under the Agency Relationship known as Dual Agency.
Dual Agency occurs when a brokerage firm represents the Buyer and the Seller. This happens when licensees in the brokerage firm representing the Seller have Buyer clients looking for types of property similar to the Seller’s property. In such an event, the brokerage firm and all of its licensees represent both the Buyer and Seller and are dual agents. Dual Agents must remain neutral in negotiations and not advance one party’s interest over the other.
Lastly, the current settlement may not be the final settlement between NAR and the Justice Department. The Justice Department doesn’t love the current agreement. If they had their choice, it sounds as if they would like to prohibit seller compensation of the buyer’s brokerage completely. NAR and the Justice Department are set to meet again in November.
Contact The Maui Real Estate Team About Buyer Representation
Buying a property on Maui is different from anywhere else in the world, even the other Hawaiian Islands. There are many nuances that an experienced professional Buyer’s Agent can help you navigate.
If you want to buy a home, condo, or lot on Maui, a fantastic first step is to set up a free consultation with a Maui Real Estate Team agent or broker. This first meeting can be held in person, via Zoom, or by phone. It is an opportunity to get to know each other, for our team to learn about your needs, discuss market conditions, and review some of the strategies we might employ to boost your odds of success.
If you are ready to look at properties, we will sign a buyer’s representation agreement before the showings. Part of the agreement is determining fair compensation for your broker or agent for when they successfully help you purchase a property. This agreement can be for a duration of your choosing. If you find that our agent isn’t a good fit for your needs, you may cancel your buyer’s representation agreement anytime.
