Imagine this: You’ve been working with a real estate agent for weeks, maybe even months, looking for the perfect home or trying to get yours sold. But then, life happens—you change your mind about selling, or you find yourself not ready to make a purchase just yet. Now you’re left wondering: Do you still have to pay your agent even though the deal didn’t go through?
The National Association of Realtors (NAR) and the Multiple Listing Service (MLS) introduced new regulations on how real estate agents disclose their fees. These rules, effective as of August 17th, 2024, aim to make real estate fees more transparent and competitive. In this Redfin article, we’ll dive into what happens when plans change and whether or not you owe your agent a fee if you decide not to buy or sell a house after all.
New rules around agent fees and agreements
In light of recent changes from NAR and MLS, real estate agents must now disclose their fees more transparently before working with clients. At Redfin, agents require that a fee agreement be signed before the first home tour to ensure that buyers know exactly how much they might owe if they choose to work with the agent. However, it’s important to note that this agreement doesn’t obligate clients to complete the purchase or to stick with the agent if plans change.
These updated rules are designed to protect buyers and sellers by ensuring they are aware of any potential costs upfront, even if they ultimately decide not to proceed with the transaction.
Deciding between renting or buying your next home? Explore your options.
Compare the costs of renting vs buying and find a lender to secure your mortgage.
Deciding between renting or buying your next home?
Compare the costs of renting vs buying and find a lender to secure your mortgage.
Do you have to pay your agent if you don’t buy a home?
Deciding between renting or buying your next home? Explore your options.
Deciding between renting or buying your next home?
Typically, real estate agents are compensated through a commission at closing, so if you don’t purchase a home, you generally won’t owe them a commission. However, the exact terms depend on your contract with the agent. It’s crucial to carefully read and understand your agreement to know any potential financial obligations you might have, even if you do not complete a purchase.
Do you have to pay your agent if your home doesn’t sell?
Probably not, but read your contract carefully. Real estate agents are typically paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission. Redfin does not charge a seller if their home does not sell, but agents at other brokerages may have different policies. You should read the fine print. Generally, your contract with your agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your selling agent if the contract expires and your home doesn’t sell.
Potential fees at other brokerages: what to watch for
At other brokerages, fee structures and agreements can vary significantly. Some brokerages may include clauses in their buyer or seller agreements that require you to compensate the agent for their time and efforts, even if the transaction doesn’t go through. This could include reimbursement for expenses such as marketing, home tours, or administrative work. Additionally, certain brokerages may lock clients into exclusive contracts, obligating them to use that agent for a set period of time, regardless of whether they ultimately buy or sell a home. It’s crucial to carefully review and fully understand any agreement before signing, as these terms can differ greatly from brokerage to brokerage.
How real estate agents get paid if the sale or purchase goes through
You may be wondering how agents will get paid under the new rules. Real estate agents are typically paid through a commission. Historically, the seller has usually covered the commission for both their agent and the buyer’s agent from the proceeds of the sale. However, as of August 17, 2024, buyers are required to agree to their agent’s fee structure in writing before touring homes. If the sale closes, a buyer’s agent’s commission might be paid out of the final sale price. While buyers can still negotiate for the seller to cover their agent’s fee, the responsibility for these commissions can now vary, depending on the terms of the offer and the negotiation process.
Final thoughts
At Redfin, we believe in transparency and flexibility when it comes to your home-buying or selling journey. If you decide not to move forward with a purchase or sale, we don’t require any payment unless a transaction is successfully completed. While other brokerages may have different policies, Redfin’s approach ensures that you’re never locked into a financial obligation if plans change.
