Realtor Interview - Allegan County, Michigan

Buyer Broker Agreements Mandatory as of August 17th 2024

I interviewed an active Realtor who serves Allegan County in Michigan. His business is 50/50, half listings and half buyers. He shared his experience with the market this winter 2024/2025. He pointed out that “wintertime means negotiating power for homebuyers.” Keeping in mind that this will not apply in a place that has winters like Arizona does, for example.. because people are happy to move year-round there, probably “especially” in the wintertime. This makes a difference.   

I was also concerned that homebuyers might feel negatively affected by the NAR change that took effect on August 17th of 2024. Three things that changed, the nutshell version, are that listings on the MLS can no longer show offers of compensation to buyers agents (which means buyers agents can’t filter out listings they show clients based on the level of commission that’s offered) and that buyers agents and home buyers must sign a buyer broker agreement or “Buyer Agency Agreement” (this was always ‘recommended’ but now it’s mandatory) and sellers are no longer ‘expected’ to foot the bill for the buyer’s agent commission (meaning that buyers may have the agent commission cost added to the costs of purchasing a home). That was always a matter of negotiation but customarily the buyer didn’t have to pay their agent’s commission out of their own pocket.

I was wondering how they were handling these changes and he explained that aside from the way a listing shows on the MLS and some additional negotiations, not too much has changed as will be explained if you read on.

I wanted to share the Q & A that I feel gave good insight into some important points.

Where are you seeing the most activity; what kind of homes and where are they?

“It's mainly the more inland houses because interest rates have steadied pretty high right now, they're just under 7%. The homes close to the lakeshore are typically going to be higher dollar and that coupled with high interest rates means they sit on the market a little bit longer.

“The hottest price points we're seeing right now is really anything that's a fair quality house in the $350K and under range. The Gen Z and millennials trying to buy their first houses and that's kind of the most affordable price range for most people.”

Are you predicting rates to get better in the spring or later?

“It's just so hard to predict. I've heard big mortgage companies say they're predicting rates to be like 5.75, mid fives, by the end of next year but I hate to speculate and be flat out wrong. I think the general consensus is that they’re expecting interest rates to be somewhat more appealing next year.”

I’ve worked on the mortgage side of the business for almost 10 years and I noticed the higher rates don’t really affect the market much; people still buy houses. But what about the changes with NAR in August where the seller no longer foots the bill for the buyer’s agent commission?

I was worried that people would be afraid to buy houses now that their agents commission is part of the cost, especially first-time home buyers. I also wondered if they’d just start rolling it into the loan. Has that affected you?

“The seller is still able to offer a buyer agent commission via seller concessions or straight up offering the commission but the change means buyers agents can no longer see on the MLS that this house has commission on it. It has to be negotiated with the sellers agent instead; we basically have one extra step.

“So when we pursue a house with a buyer we write it into our offer; we just say our offer is $300,000 (for example), and this amount is the commission we ask as a part of this offer, and then we go forward there. It’s pretty much our standard verbiage each time we're writing an offer for a buyer, ‘listing broker to pay X percent to buyer’s agent on behalf of the buyer as a commission’. I haven't really noticed too much of a change.

“When I list a house I say here's what I charge to sell a house… if you want to offer a commission we can, or we can offer a seller concession online. You’re able to put online that the seller is offering 3% of the sales price as a ‘seller concession’ but you aren't able to say the ‘commission’ is 3% on the listing itself …you can't publicly state what the commission is.

“I mean at the end of the day it's now more of a negotiation both with the buyer and the seller. Your Buyers Agency Agreement states this is how much the agent charges to help you buy a house; we'll just say, for example, it's 1% (to keep things simple). When we go talk to the seller we present this offer to them. If they say they’re willing to pay half a percent and the buyer has signed a contract stating they're paying 1% to their agent then that's where the buyer could be on the hook to pay that difference. But I haven't had any issues so far with just having the sellers pay whatever the buyer and I have agreed to before even seeing houses.”

Is there anything you want people to know to feel more positive about the market or buying a house right now?

“There's great opportunity right now. In the winter time, buyers have negotiating power unlike in the spring and summer. I have one client who's going to be closing in a couple of weeks who got $20,000 off the home price and one that closed yesterday that got all of his closing costs covered. In the spring and summer time it’s usually a very strong sellers’ market where buyers are having to pull out all the stops to make it happen.

“There's a lot of opportunity in these homes that are sitting on the market longer because people don't ideally want to move in the winter. There’s ability to negotiate whether it's paying less out of pocket, reduced sales price, or anything else creative that we can make happen. I want to encourage people to at least reach out and see what options look like.”

So there we have it…we can still buy homes and afford to be represented by a real estate professional. The two most important things to know when preparing to buy a home are these: hiring a Realtor with good negotiation skills is key and winter time may be the best time in Michigan.