The real estate industry has seen significant changes in 2024, particularly regarding Realtor commissions. The recent adjustments to buyer agent compensation have sparked a wave of concern among homebuyers, as some agents are now leveraging these changes to their advantage, often at the expense of their clients.
Understanding the Shift in Buyer Agent Compensation
Before the 2024 commission changes, buyers typically paid their agents a compensation fee that was often less than 3%, and sellers usually covered this fee. However, as the transparency of commission structures has decreased, buyer agent compensation fees have decreased slightly. A new group of agents, calling themselves “3% agents,” has emerged, fundamentally shifting how buyers compensate for their representation.
What Are “3% Agents” and How Do They Affect Buyers?
A “3% agent” is a buyer’s agent who refuses to accept anything less than a 3% commission. In many transactions today, sellers offer only 2% compensation to the buyer’s agent, a practice that has become increasingly common. When working with a “3% agent,” buyers may be required to pay the additional 1% out of pocket to ensure their agent receives a full 3% commission.
This practice was relatively unheard of before the recent changes, but now, some buyer agents openly discuss, often boasting online, how they require buyers to cover the difference. This creates an unnecessary financial burden for buyers who may not have anticipated paying extra agent fees when purchasing a home.
Beware of Misleading Buyer Agent Agreements
Some agents are using aggressive tactics to secure their commissions. One common strategy is to pressure buyers into signing a Buyer Agency Agreement before viewing a home. In Colorado, however, buyers are not legally required to sign an agreement before touring homes. If buyers are unaware of this, they might be misled into a commitment that binds them to an agent demanding a full 3% compensation, even if the seller’s contribution falls short.
To protect yourself, ask prospective agents upfront: Are you a 3% agent who requires buyers to cover your compensation shortfall? This simple question can save you from unexpected costs and ensure you work with a transparent and ethical professional.
Reference: merriam-webster.com/dictionary/compensation
Not All Realtors Operate This Way
Fortunately, not all realtors impose these rigid commission structures. Many reputable agents still prioritize their clients’ best interests over their commission. There are legitimate exceptions, such as when a seller offers little to no buyer agent compensation, in which case an additional fee may be warranted, as it is unrealistic to expect buyer’s agents to work for free. However, responsible and ethical agents communicate these details upfront and handle such cases reasonably on a case-by-case basis.
Alarmingly, some agents are now bragging about showing only a few homes before locking buyers into contracts that ensure their full 3% commission. This behavior negates the fiduciary responsibility agents owe their clients.
Fortune Realty: Putting Buyers First
At Fortune Realty, we believe in transparency and prioritize our buyers’ needs over our new buyer agent compensation rules. We operate differently from these so-called “3% agents,” ensuring our clients receive the best representation without unnecessary financial strain.
Have questions about how buyer agent compensation works? Contact us if you’re looking for a realtor who prioritizes your interests.
