Fannie and Freddie Address Buyer’s Agent Commission Questions

Blog posted On April 15, 2024

Earlier today, Fannie Mae and Freddie Mac clarified questions about the payment of real estate agent commissions. These questions were brought up shortly after the nationwide settlement agreement proposed by the National Association of REALTORS^® (NAR). The updates are largely aligned with the previous statement that the FHA published on March 28, 2024, which confirmed that there will be no changes to seller-paid buyer agent fees at this time.

Commission Policy Updates

Under the existing Fannie Mae and Freddie Mac policies, the buyer agent fees, which have customarily been paid by the property seller or seller’s real estate agent, are not subject to financing concession limits. If these fees continue to be paid by the property seller, they will not be subject to financing concession limits.

NAR Settlement Recap

The National Association of Realtors (NAR) recently made a significant settlement agreement to help increase transparency in the real estate industry. Here’s the gist:

1. The settlement seeks to address allegations concerning broker commissions associated with NAR
2. NAR subsequently clarified that it had not established or influenced commissions to a fixed rate of 6%. The Association emphasized that commissions have always been negotiable, independent of this settlement
3. Additionally, the settlement introduces a fresh MLS regulation prohibiting compensation offers on the MLS and mandates that MLS participants must engage buyers in written agreements before home tours commence
4. The settlement is NOT yet set in stone. It’s proposed. In order to fully go into effect, it still has to be approved by the Department of Justice. Any changes that could happen are down the road

What the SETTLEMENT means for YOU

Once the Association and MLS start prohibiting the advertisement of commissions on the MLS, you’ll likely have more flexibility to pay for the services you want and avoid paying for those you don’t need. With the written agreement, you will know an agent’s fees and services before moving forward with any work. You could pay for an ‘on-demand’ showing, and/or just negotiations, and/or other services.

 Why you should always use an agent!

• Expert Guidance: A real estate agent brings expertise and knowledge to the table, helping you navigate the complexities of the home buying process with confidence. From understanding market trends to negotiating the right deal, their guidance can be invaluable.
• Access to Listings: Real estate agents have access to a wide range of listings, including properties that may not be readily available to the public. This gives you access to more options and increases your chances of finding the perfect home.
• Negotiation Skills: One of the most significant benefits of working with a real estate agent is their negotiation skills. They can negotiate on your behalf to ensure you get the desired price for your dream home, saving you both time and money in the process.
• Legal Protection: Buying a home involves a lot of paperwork and legal intricacies. A real estate agent can help you navigate these complexities and ensure that all the necessary legal requirements are met, protecting your interests throughout the transaction.

The settlement still must be approved by a judge, and we’ll keep you updated with any developing news. We’re committed to helping you in any way we can! Whether you have questions about the settlement, are looking for a reputable agent, or want to explore your options, let us know.

Sources: NAR, U.S. World and News