Well, a question you might have today if you're in the real estate market is "Does a Seller have to pay a Buyer's Brokerage?" This is David Buck with Harcourts Island Real Estate and I've now been licensed since 2001. I'm dating myself with 24 years in the business. A lot has changed in our industry. Especially since August 17th of this year, 2024, with the National Association of Realtors class action settlement.
Settlement Term - Mandatory Buyer's Representation Agreement
Part of that settlement is that us as Realtors, as of August 17th, we have to have a Buyer's Representation Agreement signed with a Buyer prior to showing property. Now, this has not been something that has been a standard of practice throughout our industry (in the past). Some agents have decided to do that. For myself, I always thought of a 2 way trust factor, so I didn't always make my clients sign one of these. However, I just want to tell you a first hand story. As recently as today, I had several showings set up for a buyer in Kakaako as well as Waikiki and we were going to see a handful of relatively newer condos. They were all good with signing it as of yesterday. Today, they wanted to cancel because they don't feel that this is right. Well, unfortunately, going forward, any Buyer that wants to see a property and wants to work with a Realtor needs to sign one of these Buyer Rep Agreements prior to looking at property. So, I just wanted to put that out there and those are the expectations going forward.
As we started this off, "Does a Seller have to pay a Buyer's Brokerage"? No. I think that's the fear that comes out when a buyer has to sign something and worrying about a seller not wanting to pay a buyer's broker. Well, it turns out, of all the listing or sellers agents that I called when I made the cancellations for the showings, every single one of them said their seller is willing to pay a buyer's brokerage. So, even though they don't have to, the standard of practice in our industry for over 100 years has been that the seller does pay the buyer's brokerage. So, they see value in that. That's why I feel like a lot of this will continue the way it has been. Now, as far as what's being offered by the seller, that is negotiable. It could be as low as zero to what they feel comfortable paying. Over the years, it's kind of been balanced out as to what works and doesn't work. Going forward, I just want to get that out there because I know there will probably be other buyers out there in the market as well as sellers asking do I have to pay a buyer's brokerage? My recommendation would be yes. In all of the listings I currently have for sale, they are offering that compensation because they realize that value.
Buyer's Agreements = Less Dual Agency & Liability
On the other side of the coin, when you have an agent representing a buyer, it creates a separation of agency. In our our industry, 90% of the time when you have lawsuits, it has to do with dual agency, where the same brokerage represents the seller and the buyer. So, it's good to have representation on either side. That's why it's been our standard of practice. Going forward, anytime we show a property as a Realtor, we need to get a buyer's rep agreement signed.
I just want to share that with you because we're just over a month after that started. I've already got my first deal closing where I got a buyer's rep agreement signed. They signed (at escrow) today and we're closing next week. So, that's the standard of practice in our industry moving forward. I just want to get that out there. If you have any questions about buying or selling real estate here on Oahu, feel free to give us a call at 808-371-3509. Mahalo!