As of August 17, 2024 Buyers are required to sign buyers representation agreements before viewing property with a real estate agent. This law is still new and I still have many questions.

How things worked in the good ole days

In the good ole’ days it was optional for Realtors to have their clients sign buyer representation agreements. Usually this was done to keep buyers loyal and not for a commission. It was unheard of for a buyer for pay a Realtor a commission. However, by law Realtors are able to charge buyers to consultation or showing property if agreed upon.

Rules in our MLS

It used to be that a Realtor COULD NOT post a property for sale in the MLS without having a commission offered to the Buyers agent. Now things are the complete opposite. It is now forbidden to mention anything about commission in the MLS.

In the good ole’ days it was also illegal for Realtors to try to negotiate our commission in the purchase contract. Now this is what is being done. Agents are negotiating their commission along with their buyers offer.

Everything is the complete opposite!

How did we get here?

It is crazy how the laws changed so quickly which almost felt like overnight. I wish other boards and laws could get passed this easily. Usually change like this takes years and years and eventually never happens.

Basically a home owner got upset that they had to pay for the buyers agent (even tho this is what they agreed too in the listing agreement.) And a lawyer did a class action lawsuit.

What happens now?

Now Sellers are able to decide if they want to pay the buyers agent or not. Luckily on Kauai most of the sales the sellers are still agreeing to pay the buyers agents.

How are buyers affected by this new law?

Buyers have to agree in writing to pay their agent a certain amount (usually a percentage of the sale price) beforehand. Meaning before viewing properties.

If a buyers representation agreement is set at 3% and the seller is only offering the buyers agent 2% then the buyer is responsible for paying the difference of 1%.

Luckily I do not think that this new law has affected our real estate market so far. I definitely see some effects on the real estate market through other factors like the interest rates and cost of living. But this new law not so much.

What if buyers don’t pay their Realtor?

This is what I really want to know. Many buyers can hardly afford to pay for their downpayment along with their closing costs from a mortgage averaging around $15,000. Many buyers are first time home buyers or VA loan homebuyers.

Will escrow not close? Or will escrow close and the Realtor is responsible for going after their buyer for compensation? Personally I can’t imagine taking legal action against a client of mine.

My thoughts on Buyers Representation Agreements

In a way having a buyers representation agreement is nice. Only in the way that it keeps a buyer loyal to Realtor. It’s always been a problem of buyers working with multiple agents.

Since most sellers are still paying buyers agents everything has been OK.

I will not know what will happen until the day comes where I am working with a buyer that cannot afford to pay me and the selling agent is not offering any compensation.

If you are looking for a Realtor to represent you on the island of Kauai view our agents here. 

More questions are answered here from the National Association of Realtors Click Here.