New Buyer Representation Law in New Jersey

Buyer Agency Contract

Starting in August 2024, a New law in New Jersey will require buyers to sign a Buyer Representation Agreement before a real estate agent can begin showing them properties. This agreement ensures your agent is working exclusively on your behalf and also outlines how the agent will be compensated.

What Is a Buyer Representation Agreement?

A Buyer Representation Agreement is a formal understanding between you and your real estate agent. It confirms that you’ll be working together exclusively during your home search and purchase. This means your agent is fully committed to representing your best interests throughout the entire process.

How is the Buyer’s Agent Paid?

1. Seller Pays the Buyer’s Agent Commission: In most cases, the seller pays the buyer’s agent’s commission. This commission is typically a percentage of the sale price (usually between 2% and 3%) and is included in the property’s price.
2. If the Seller Doesn’t Offer a Commission: If the seller does not offer compensation to the buyer’s agent, the buyer will need to cover the commission. However, there are often ways to handle this, which we’ll discuss below.

Options If the Seller Isn’t Offering a Commission

If you find yourself in a situation where the seller isn’t covering the agent’s commission, don’t worry. There are options:

1. Add the Commission to Your Mortgage: In many cases, you can include the agent’s commission in your mortgage loan. This allows you to finance the cost over time, easing the initial financial burden. Be sure to check with your lender to confirm this option is available.
2. Negotiate with the Seller to Cover the Commission: You might be able to negotiate with the seller to either cover the commission or adjust the property price to account for it.
3. Adjust the Property Price: Depending on the market and the property, you could also negotiate a price adjustment to cover the agent’s commission. This way, the buyer wouldn’t have to pay the commission directly, but the overall cost of the property would increase.

Why Is This Agreement Important?

This new law helps clarify the relationship between buyers and agents. By signing a Buyer Representation Agreement, you’re ensuring that your agent is dedicated solely to your interests. It also clearly lays out how compensation will work, either paid by the seller or through one of the flexible options above.

Key Takeaways

• Most often, the seller covers the buyer’s agent’s commission.

• If not, you’ll have options to make the cost more manageable.

• There are no upfront fees when signing the agreement.

• You’ll receive exclusive representation and guidance throughout the process.

Next Step

Once we have this agreement in place, we can start touring homes and move forward confidently. I’ll send it to you to review at your convenience, and I’ll be happy to walk you through every detail.

Let’s make this process smooth, informed, and stress-free!

Have questions or want more details about the process?

Feel free to reach out to learn more about signing the Buyer Agency Agreement and how we can handle compensation if the seller doesn’t cover the commission.