Homebuyers are now required to sign agreements that state they are on the hook for their real estate agent’s commission, under a new federal court ruling.

In Central Oregon, real estate agents rolled out these new buyer-broker agreements last week, earlier than the deadline set by the federal court ruling in October 2023. In that ruling, a jury found that the National Association of Realtors, along with some large brokers, conspired to inflate real estate agents’ commissions.

The Multiple Listing Service that agents use to seek out properties for sale set a Saturday deadline for when all home sale listings cannot include a cooperative commission agreement, said Jaynee Beck, Central Oregon Association of Realtors president.

The regional association, which includes Central Oregon, Klamath Falls and parts of Southern Oregon and has about 2,400 agents and brokers, hasn’t seen any complaints so far, Beck said.

“There will be a learning curve,” Beck said. “If you want to get into a house, you’ll have to sign an agreement up front stating how you’ll pay the agent and how much.”

The ruling also requires that sellers will no longer be responsible for paying both their own agent’s and the buyer’s agent commission. In the past, the commission would be equally divided between the two agents.

In order for a buyer to get a seller to pay the commission for both agents, it will be added to the contract and become part of the negotiations, said Grant Ludwick, a broker at The Agency, a Bend real estate firm.

“We encouraged the use of them (the buyer agreements),” Ludwick said. “The buyer is signing an agreement that assures the broker will get paid regardless if the seller agrees. It opens an opportunity that has always been there, but not taken advantage of by Realtors to explain the compensation process to buyers.”

How it worked before

Generally, real estate agents do not get paid until after a home is recorded on public rolls and gone through the escrow process. Sometimes an agent can invest months showing dozens of homes to buyers without closing on a sale.

“We don’t charge per hour like other professionals,” Ludwick said. “We’re commission based. Sometimes you show 45 properties or just one and the commission is the same.”

The buyer agreement now will set up the rate paid to the agent, and establishes an exclusivity with the agent, he said.

Agents said they don’t expect there will be much pushback in the homebuyer market, but real estate agents expressed concern that a seller could refuse to pay the fees for the buyer’s agent, he said. Buyers are already tapping their wealth to pay the down payment, the closing costs and possibly now the left over real estate buyer fees, Ludwick said.

Going forward

But there is an upside. Having buyers sign a form up front before showing any homes will mean agents will counsel the buyer, outline the process, and discuss affordability and services that will be provided. In the past those conversations and expectations were not generally spelled out, said Beck, who has been in the business for 32 years.

“Buying a home is very emotional,” Beck said. “Agents do the inspections and coordinating and deal with repairs, the title company and lenders. It takes a lot to get a deal done.”

Commission rates have always been negotiable between the agents and the sellers, said Lester Friedman, managing principal broker of Premiere Property Group. Generally sellers paid the agent fees out of the sales proceeds.

Buyers will be responsible for paying it directly to the buyer’s agent, unless the seller agrees to pay. If the buyer agrees to pay 3% of the sales price to the buyer’s agent, and the seller agrees to less, the buyer will be on the hook for the difference, Friedman said.

“Buyers will ask for commission for their agents in the offer,” Friedman said. “It won’t make it easier on the buyer or the seller or the agents who are trying to help people get in and out of a property.”

Nearly a third of homes in Bend sold for more than $1 million in July