Kailua Kona Real Estate Blog

If you have not been following the news over the past several months you may not be aware that starting August 17^th 2024 anyone looking at real estate and wanting a Realtor to represent them will be required to sign a Buyer Representation Agreement

Yes we have been talking about this matter along with commissions and the NAR lawsuit settlement  and today I am going to discuss the Buyer Representation Agreement or Buyer Representation Contract and hopefully address any questions or concerns you may have regarding this change that is happening throughout the real estate industry in the United States.

Starting this month on August 17^th, if you want to look at a property or even have your Realtor open a door to a property on your behalf you will be required to sign a Buyer Representation Contract. 

So Stephen what does this mean and how does it a affect me?

Well there are some misconceptions to this change and right now people don’t even understand what is going on.   Yes, these changes are going to impact everyone in the real estate industry, buyers, sellers and Realtors alike.

So, when you list your home for sale with a Realtor, you sign a listing agreement for a fixed period of time and generally agree to pay your listing agent a commission if they sell your home.  Also in that agreement you would state whether you were going to pay a commission to an agent who brought a buyer to purchase your property.

That process is still going to take place, however with a few changes and we will discuss later in another video.

Moving forward when you want a Realtor to represent you on the purchase of a property, you will need to sign a Buyer Representation Contract similar to what you may already be familiar with when selling a home.

The first misconception is the length of time of the Buyer Representation Contract is

people feel they are going to be tied up for months or even a year and that is not true.

The Buyer Representation Contract will establish a start date and an end date.  These dates will be negotiable on your part.  The contract will spell out that either party can cancel the agreement with notice.   This is something that I always do with my listing agreements and that is a great thing.

You don’t want to sign a long contract say for 6 months to a year because you don’t know whether the agent you decided to work with is good or maybe they are lazy, or maybe you don’t like them

   Likewise, I don’t want to be tied up for a lengthy period of time working with someone who is unrealistic, demanding, disrespectful, not qualified to buy a property or is not a good fit for me.

So my advice to you, is to limit the time you are locked into your contract. Could it be 30 days just to see how things work out?  Yes, and if you want to extend for a longer period of time, you are free to do so.  Its like dating, if you aren’t getting along, you move on.

Could the contract be for just 1 day?  Of course it could, but that might not be enough time to evaluate each other.

One thing you need to be aware of you cannot sign multiple buyer representation contracts because there is a financial obligation portion of this agreement that you are responsible for

If an agent tells you that you must sign a long term contract, you may want to reconsider working with them and find someone else.  

Like in the listing agreement, seller pays their agent if they sell their property and in the Buyer Representation Contract there is a compensation agreement clause in place that states how much money or commission you will be obligated to pay your Realtor if they successfully represent you on the purchase of a property.

Wait, hold your horses on this one I never paid an agent to represent me in the past and I am not going to do it now.

You are not required to use a Realtor when buying a property, however if you do use a Realtor to show you properties, then you will be required to sign a buyer representation contract

So, lets jump in here and explain the Buyer Representation Contract compensation section.

First the buyer representation contract will state exactly what your Realtor is expecting their compensation to be for their services if and when a sale is completed.  They cannot accept more than what is agreed to in writing and that compensation can come directly from the sellers, the listing agent or lastly from you.

This amount may be negotiated as well

A misconception is the buyer is going to pay more for a property using this Buyer Representation contract and that is not true

It is our feeling that sellers will still offer compensation to agents who bring them a buyer for their properties, if not, properties may sit on the market a long time and not get sold

Also you can always negotiate with the sellers for a credit back or concession at closing or even request the sellers to pay your agents a commission within the purchase contract.

This is why you want an experienced agent to represent you on the purchase of your property and you may not even be affected by this change however this new procedure was brought about

 by the settlement agreement with the department of justice and the National Association of Realtors regarding a class action lawsuit.    If you want to learn more about this settlement and changes, check out our video, 

Hawaii Real Estate Is Dead NAR Settlement Explained

This is a brand new procedural change for the entire real estate industry so we may see further changes after this program gets rolled out later this month.

 So moving forward everything is negotiable, all contracts even this new buyer representation contract so please keep that in mind.   As always you want to have someone representing you that has the knowledge and skills to meet and exceed your expectations.   You will be signing a contract for representation so make sure you choose wisely.

Hope this information was helpful and we look forward to assisting you with your real estate needs here on the Big Island of Hawaii