As part of a recent antitrust settlement, buyers on Cape Cod and beyond now need to cover their own side of the commission in home purchases. The buyer representation agreement, signed before viewing homes, outlines what your agent expects as compensation. However, options for paying this commission vary, and you’ll want to find a method that fits your financial goals.
Flexible Agreements for Buyer Services
In response, consumer advocates encourage using non-binding “touring agreements,” like those from Zillow. These agreements allow agents to showcase properties without tying buyers to financial obligations. This arrangement allows buyers to work with agents temporarily before making a final commitment, creating flexibility in the early stages of the buying process.
Covering the Buy-Side Commission
To address the commission cost, some Cape Cod buyers request that sellers reduce their asking price to cover this amount. Buyers may also negotiate with sellers for a commission rebate at closing, easing the upfront cost. Other methods include paying in cash or adding the fee to the mortgage, which, though it increases monthly payments, can make the cost more manageable. Financing options are evolving; some banks even offer lines of credit specifically for commission fees.
Financing Considerations and Lender Guidelines
Including the commission in the mortgage involves key considerations. For one, Fannie Mae and Freddie Mac have not yet confirmed whether they’ll purchase loans that include buyer-side commissions. A decision against it could restrict financing options, impacting eligibility and loan terms for Cape Cod buyers. Additionally, adding commission to the mortgage increases the loan-to-value ratio, potentially raising interest rates and mortgage insurance costs. However, for those stretching funds across down payments, closing costs, and commission, financing the commission could be a practical solution.
As Cape Cod homebuyers adjust to these changes, understanding and planning for commission costs can simplify the process and help ensure a smooth transaction.
