You may have heard in the news about the NAR Settlement, and there was a lot of bad information floating around. Having been licensed in NC since 1997, teaching the real estate license law for 15 years, and a member of the Board of Directors for the Outer Banks Association of Realtors, I’m bringing a snapshot of what to expect as we approach the implementation date on August 17th.
Firstly, be aware that NC has had buyer agency in place since 1995. Secondly, sellers in NC have never paid the buyer’s agent. Our listing agreement has a section where sellers “acknowledge” the listing firm may split the compensation the seller pays the Listing Firm, and a disclosure of what that split will be. Our local MLS then served as a binding and blanket offer of compensation from the listing firm to the selling firm. So, in this state, we’ve really been doing it right the whole time.
However, the two main changes that could affect how you buy in NC are as follows:
- You will be asked to sign a written buyer agency agreement BEFORE being shown any home.
- You may be responsible for paying some or all the compensation for your buyer’s agent if the seller/listing firm offer none.
*Special Note: Compensation has ALWAYS been negotiable and based on the services provided as established by each individual Firm. As of this blog, we truly have seen only a handful of sellers choose to not offer or authorize a compensation to a cooperating firm. We don’t expect there to be a big change in this. Most sellers realize it is in their best interest to cooperate with buyers agents.
North Carolina still offers two types of Buyers Agency: Exclusive and Non-Exclusive. The difference between them is explained here:
- Non-Exclusive – traditionally this was used in the beginning of a relationship when just getting to know each other. It doesn’t bind the buyer to paying any compensation but does disclose that compensation will be sought from the listing firm or seller directly. That is still the case, however, if you desire to see a home with your buyer’s agent under this agreement and NO compensation is offered through the seller or listing firm, the agent is prohibited to show you that home. You will either execute an exclusive agreement with your current agent, or contact the listing agent directly to see the home. If you contact the listing agent directly you will be unrepresented.
The purpose of the non-exclusive agreement is to establish an agency relationship, with limited duties. Buyers can sign this agreement with more than one agent as they conduct their search. Beware this type of searching can result in the agents ending up in a procuring cause dispute. So always be up front and honest with agents to avoid this situation.
- Exclusive – this type of agreement is more like an employment contract. You are hiring the agent to work exclusively on your behalf to find the right home, listed or not listed. And as such, you are securing the compensation by agreeing to pay it. Buyer’s agents will still seek compensation offers from listing agents and sellers, but if the offer of compensation is LESS than what is agreed in your exclusive agreement, you will be responsible for the balance.
If you are out with an agent touring multiple homes and have no written agreement, most likely the agent is not operating in compliance with the Settlement. There are two exceptions: they are not a REALTOR member subject to the settlement agreement, or all homes viewed are listed with the agent’s firm and you are unrepresented.
There are multiple benefits to interviewing and hiring a good Buyer’s Agent, especially in the Outer Banks market where the average price is $800,000. That’s a big investment! Here are some of the reasons:
A good agent will….
- Listen to your wants and needs and save time by finding the right home to match your criteria
- Know about the local laws, restrictions and uses that could affect your ownership experience
- Know the differences between areas to help find the right fit
- Have great vendors to work with to get you pre-qualified, inspections complete and repair estimates, insurance agents, closing attorneys
- Guide you through the nuances of the Vacation Rental Act
- Work directly with your lender, insurance agent, property management company and closing attorney to manage the issues that come up between contract and closing
- Remain objective and unemotional to negotiate the best terms for you
- Have a solid understanding of the sales contract and how to best represent your needs
- Communicate effectively, being available and promptly responding to calls and emails
- Able to identify red flags in a home or process and provide good solutions
There’s a reason it takes 45 to 60 days from offer writing to closing a real estate transaction. It is a full time job! I have prepared a full presentation with valuable information. If you are thinking of interviewing a great agent to find your perfect OBX home, give me a call!
