Inman

Why a buyer agreement alone won’t get you paid

Cassie Walker Johnson at Inman Connect Las Vegas | Photos by AJ Canaria Creative Services

Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.

The Aug. 17 deadline is here, and agents have been in a mad dash to update their systems and processes to comply with the new buyer agreement requirements.

But here’s the catch: Even with a signed buyer agreement in hand, agents might find themselves empty-handed unless they also establish a solid compensation plan.

The buyer agreement will spell out your compensation rate, but it likely won’t detail how you’ll actually get paid. What if the seller isn’t offering concessions? What if the buyer doesn’t have the funds to pay you?

Until Freddie Mac and Fannie Mae update their regulations to allow buyer agent compensation to be rolled into the buyer’s loan, it’s crucial to have a compensation plan to ensure you get paid for your hard work.

As I spoke about on a special panel about agency at Inman Connect Las Vegas, this is a complicated issue, and it’s going to take careful planning and execution with customer service to get the results that you are looking for.

Drafting this plan in collaboration with your buyers before showing homes will ensure that your buyers are prepared and that you’re in full agreement when it’s time to write the offer.

Steps to create a rock-solid compensation plan

Step 1: Identify ‘the home’

Once you find “the home,” reach out to the listing agent to inquire if the seller is offering any concessions or compensation to cover the buyer agent compensation (BAC).

Step 2: Draft the offer

When drafting the offer, include the BAC fee agreed upon in your buyer agreement. From here, several scenarios could unfold:

  • Scenario A: The seller accepts your terms, and you proceed to mutual agreement.
  • Scenario B: The seller counters with a lower rate than agreed upon in the buyer agreement. Collaborate with your buyer to decide whether to reject the counter or accept it, and cover the difference.
  • Scenario C: The seller rejects the request for compensation, and the buyer must decide whether to pay the BAC in full or walk away from the offer.

Exploring payment options

If the buyer needs to pay the full BAC, several options are available to secure the funds:

  • Down payment adjustment: The buyer might apply a portion of their down payment funds toward the fee.
  • Closing costs: Explore with the lender the possibility of incorporating the BAC into the closing costs and increasing the purchase price to cover the difference (subject to appraisal).

No matter who ultimately pays the buyer agent compensation fee, the key is to work together to ensure the fee is covered and, most importantly, that your buyer lands their dream home.

Remember this

With a comprehensive compensation plan in hand, addressing all the “what ifs” in a transaction, you’ll not only comply with the new regulations but also ensure you close with a check in hand. So, take the time to create this plan, and set yourself up for success in this new era of buyer agreements. 

Cassie Walker Johnson is a managing broker at Windermere Real Estate. Connect with her on Instagram and LinkedIn.