Home buyers beware: Change in Bay County real estate industry policy presents new hurdle

PANAMA CITY − Shifts in the real estate industry have created another hurdle for Bay County buyers.

Starting Aug. 12, two new rules will be added to the local home buying process: Properties listed in the multiple listing service will no longer include compensation offers for buyer agents, and buyers now will have to sign written agreements with their agents outlining compensation before touring homes.

According to Kaydee Albritton, CEO of the Central Panhandle Association of Realtors, the changes stem from a class-action lawsuit filed in 2019 by a group of Missouri home sellers who argued it is not fair for them to "have to pay the full amount of compensation."

Traditionally, whenever a home is sold, a portion of the sale is divided between the selling and buying agents. The new rules might lead to more instances where buyers are responsible for personally paying their agents.

"That is obviously a concern because we know that first-time home buyers, even your average buyer, really doesn't have the additional money to come out of pocket," Albritton said. "The whole goal from the seller's perspective is that they want to just pay for the services that they receive from their listing agent.

"They don't think it's fair that they have to pay for a buyer's agent. Our argument from the National Association of Realtors' perspective is that the buyer's agent is the one bringing the buyer and procuring the sale of the home, and so they should be compensated for the work that they're doing."

Though compensation rates will no longer be listed on the MLS, sellers will still be able to make offers of cooperative compensation − something Albritton said will continue to be beneficial, especially in today's market.

She noted buyers covering their agent's commission is a last resort. Agents will first look to receive compensation from listing offices. If it is not available there, they will then turn to sellers. If neither options are possible, compensation would then fall on the buyer.

Albritton also said that if buyers are responsible, they might not be able to lump the money they owe their agents into a mortgage, meaning they would need to have additional cash on hand.

For example, if a first-time home buyer is looking to purchase a property using an FHA loan, they are required to make a minimum down payment of 3.5%. So if they are eyeing a $300,000 house, that means they would need to put down $10,500.

If they also are required to pay their agent, and that agent charges a 3% commission, they would need another $9,000.

This means the same buyer using an FHA loan would now need almost double the amount of cash to purchase the same property, if they are responsible for paying their agent.

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"The goal isn't to get the buyer to pay out of pocket," Albritton said. "When they're working with a realtor, their first goal is to try and seek compensation from the listing office, and if not the listing office, they would seek compensation from the seller directly. And then, at the very end of the day, if they can't accomplish that, then the buyer would be held accountable for whatever compensation they are charging.

"This isn't really about artificially inflating home prices to pay for realtors, so much as it is (knowing) exactly what the realtors are getting paid, and at the end of the day, it's who is paying them."

This article originally appeared on The News Herald: Home buyers beware: Change in Bay County real estate industry policy presents new hurdle