Do Buyers Pay Real Estate Fees In Washington State?
Who Pays What?
Everything you need to know about the New Required Buyer Broker Agreement
It’s official: if you are using a real estate agent (hopefully it’s me) and are actively looking to buy a home, it is now law, starting August 2024 that you will be required to sign a Buyer Broker Agreement (BBA) if you engage in real estate activities- such as looking at homes or real estate advice from a licensed agent. I like to think of this agreement as the “ring,” but unlike an engagement, you can choose to NOT make it exclusive and you can dissolve this contract at any time with a written notice.
If you’ve known about Neighborhood Experts for any length of time, you know that we are constantly improving so we can continue to lead in the local market. However, it’s been 30 years since the real estate industry as a whole has updated their service agreements, and we applaud these changes that continue to level-up the professionalism in the real estate world.
We are very pro- buyer broker agreement.
We are breaking down this blog post in 3 areas-
Buyer Brokerage Service Agreement Overview
What does this mean for Buyers?
What does this mean for Sellers?
How to hire the top real estate agents in Gig Harbor, Tacoma, Port Orchard and Olalla. Our geographic zone of happiness.
(1) Buyer Brokerage Service Agreement Overview
Buyer Brokerage Service Agreement
The Buyer Brokerage Service Agreement brings more transparency on how buyer’s agents are paid. (If you are interested, here is a sample of the document.) We’ve been ahead of the curve here in Washington state with transparency online, but the formal agreement that has always existed was rarely used and it didn’t list out with this much clarity how your agent gets paid. This is now SUPER clear. The first requirement came in January of 2024, and the buyer broker agreement went nationwide in August of 2024.
We’ve always had clear listing agent agreements when we represent the seller, and this new agreement gives the same professionalism to the buyer’s representation. We hope it will make buyers more thoughtful when they hire an agent because whether the seller offers compensation or not, YOU as the buyer are really the one paying your agent. (It’s always been this way, that even if the seller does offer compensation to the buyer’s agent, it is wrapped up into the purchase price. But more on that below.)
If you are a buyer, it is now required to have a Buyer Brokerage Service Agreement in place as soon as reasonably possible. Want to tour a home? Like to see comps on a home you love? Need to write an offer or ask your agent for local knowledge and market expertise related to buying? All of these warrant a service agreement prior to delivering those services.
Who Pays What?
Most buyers think the seller pays the buyer’s agent. Not true. In Washington state, the listing agreement that the seller signs has a separate compensation line for both the listing broker AND the buyer’s broker. Sellers are not required to pay a buyer’s broker compensation, but most often they (the sellers) do. This is due to the large amount of money that buyers already have to bring to the table in order to close, and while most buyers would not be able to afford to pay a real estate agent as well, they want representation on such a big financial decision. When the seller offers compensation for the cooperating broker it also helps attract more buyers to a listing. In addition there are some loan types (such as VA and FHA) that do not allow a buyer to pay a broker directly and thus the buyer pool for a listing would be restricted if no compensation was offered.
With that being said, we always remind our buyers that they are actually the one paying their agent, although indirectly. The compensation for the buyer’s agent is “baked” into the price of the home so that the net cost (after real estate fees, seller closing costs, and Washington state excise taxes) is something a seller is happy with and willing to accept. The new agreement allows for more transparency around this conversation.
Note: If you have heard about any buyer’s commission lawsuits, be assured that Washington is not affected at this time. As a state the NWMLS has been proactive in bringing transparency to these conversations long before it was an issue. However, other states have not recognized the need to decouple the listing agent compensation from the buyer’s agent compensation, thus leading to the lawsuits that have bubbled up around the US. Our proactive behavior has kept our MLS, Washington association of realtors, and brokerages out of the negative spotlight. Go us!
(2) What does this mean for buyers?
The most common question we get from Buyers is how does this all work now? Who pays what?
As a buyer you will sign a Buyer Broker Agreement lining out the compensation you are willing to pay your agent. This says that YOU are going to pay your buyer’s broker when you buy the house. However, 95% of homes for sale, the seller’s are still offering to pay a buyer’s agent compensation, and in the state of WA our MLS publishes the buyer’s broker compensation publicly so you can see what the seller is offering to pay your agent and it is already wrapped into the price of the home, not an additional out of pocket expense. If you are getting a loan, you are wrapping the fee into the loan.
If you want to purchase a home that is NOT offering a commission to your agent OR is less than what your agreement states, you can always pay your agent directly at close of escrow.
Not willing to come out of pocket to pay your agent directly: You can choose to filter listings that are below what your BBA says you can do that.
If a seller is offering more than your agreement states, you can “check a box” to give it to the broker, give it to the seller, or get a credit back to you.
You can also have multiple broker agreements with agents that serve specific areas. At Neighborhood Experts, we pride ourselves on serving ONLY areas we know VERY well so our buyers are protected every step of the way. We highly recommend you work with and agent (or two) who knows the area(s) you are looking to buy in.
If we don’t serve the other area you are looking in, like Bellingham, we know all the best agents and can refer you to the “neighborhood expert” in that area as well as us serving you in the areas we are best at, Gig Harbor, Port Orchard, Tacoma and Olalla real estate.
Here are the options for sellers:
Offer a compensation to buyer broker (0-3%) - typical compensation ranges from 2.5%-3%
Have the buyer make a “request in offer”
Offer ZERO
What happens if you find a house you LOVE and don’t want to pay the difference or they are offering NO compensation. We’ve got you, we will write an offer for you and put the compensation in the offer that works with our current agreement, and let the seller decide if our terms are okay (especially if a home has been on the market). It can’t hurt to try and we are never too busy to write an offer on your behalf. You are the boss.
Much of the fees come down to market conditions and if it favors buyers or sellers. We can help you with that, we run market stats every week and we are actively working IN the market every day.
(3) What does this mean for sellers?
Listing Broker Service Agreement
If you are a seller, you will see a separate line for “buyer’s agent commission” and you can choose to offer compensation: Three options:
Offer a compensation to buyer broker (0-3%) - typical compensation ranges from 2.5%-3%
Have the buyer make a “request in offer”
Offer ZERO
This has always been an option but now is very clearly laid out. The listing agreement can now also be signed 90 days advance of your listing, which is helpful for the type of listing preparation we prefer to offer our sellers.
Our recommendation would be to look at what your real estate goals are, what the market place is offering and the price point and type of buyer you need to attract (FHA and VA buyers are very impacted by this change). It is helpful to have a local, full time, Neighborhood Expert guiding these decisions with you and backing it up with facts and confidence.
NOTE: This is a new conversation for all agents, especially Buyer’s agents. Many of the agents are unable to articulate their value with their buyers. If your listing is under the amount of their agreement, many will avoid writing an offer if their buyers aren’t willing to make up the difference. We are following all of the behaviors in the market and as is shifts we are educating our sellers.
We do like to run the numbers when sellers lower commission or increase commission so you know what the savings or expenses are and how it really affects your bottom line. At the end of the day, you call the shots and we are willing to test all these new situations and give you feedback on how the market is responding to our terms.
Just like with buyers- Much of the fees come down to market conditions and if it favors buyers or sellers. We can help you with that, we run market stats every week and we are actively working IN the market every day.
In Closing
There are a few other minor changes, which I will walk through if we get a chance to work together, but for now this is pretty much all you need to know.
We love the clean transparency this does for the real estate community. Empowering buyers and sellers to make the best decisions for their largest assets is what we do best.
I hope this has been helpful. If you have any questions, feel free to give us a call at (253) 313-4093. To learn more about buying or selling a home in gig harbor please call Pierce County’s top real estate agent, Paige Schulte, Neighborhood Experts.