A Letter from our CEO: Changes in the Real Estate Industry, the NAR settlement, and Buyer's Agreements

The NAR settlement has created a lot of conversation in the industry this summer, and it went into effect last week. Here's a letter that our Founder, Landy Liu, shared with Foyer members this week: 

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Dear Foyer Members,

As of August 17th, the way real estate agents operate has changed. Here’s what you should know and how you can navigate the changes as you make progress on your first home purchase.

First, here’s what you should expect:

• You will now be asked to sign a written agreement with a buyer’s agent before you go touring a home. Historically, these agreements existed but they were often signed during the home search process or even after the home was found. 
• This agreement should make it very clear how much your agent is going to be paid and in what form - typically it is a % of the home’s price known as a commission. The Seller and the Buyer’s agent typically split commissions that are between 5-6%. Historically, Sellers pay for buyer’s agents fees. Know that this precedent has NOT changed in practice, but you will now be fully aware of how much your agent is expecting in commissions. 

What should you do?

Ask the right questions!

• What is their fee in the agreement? What is the timeframe and geographical area of coverage?
• What makes this agent special? How can they help you negotiate the best possible deals and find the right properties?
• Remember, you are hiring the agent so be picky. Everything is negotiable. A good agent is well worth their price if they can help you find and buy your dream home.

• View your agent as a partner
  • Once you’ve selected an agent, work with them to secure the best deals from the seller possible - this should include the standard practice of the seller paying for your agent’s fees but may also include 1. Covering closing costs 2. Discounts on the listing price 
• Be strategic about the offer
  • As always, be careful when making your offers. I see buyers often waiving home inspections to be more competitive but this could be a grave mistake. A home inspection is like a doctor's check up for your home. You don’t want to wind up paying for things you never noticed - use an inspection to negotiate.
  • Be personal - write a letter, share your story with the seller. Often the most competitive offers are ones that aren’t the highest price but instead evoke empathy and relatability with the seller.

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Remember - a buyer’s agent is extremely valuable - that’s why over 90% of First Time Homebuyers use an agent.  Not using an agent is like going into court without a lawyer. However, with these new changes, choosing the right agent is now more important than ever. If you have any questions, reach out to us, and remember, you can always use our app to help you with finding the right agent. We built Foyer to help first time homebuyers navigate all the changes in this industry more easily. 

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Foyer will help you navigate every step of the homebuying journey. Sign up today to maximize both your savings and your confidence.