Fannie Mae and Freddie Mac Make Clarifications about Buyer Agent Commission

As many are aware, the recent NAR ruling has prompted a lot of questions from homebuyers, home sellers, and real estate professionals alike regarding the source of a buyer agent’s commission after a home sale.  How are American homebuyers to navigate the new rules regarding commission rates in the real estate industry?

Thankfully, there has been some encouraging news for real estate agents, as Freddie Mac and Fannie Mae just clarified on Monday, 4/15/24 that their guidelines permit sellers to contribute to a buyer’s agent commission without it counting against the maximum seller’s contributions in a home purchase.  In other words, that seller payment of buyer agent commissions will still not be included in the limits on seller concessions.

Ok, so what does this mean?

Glad you asked. Navigating any landmark change in real estate transactions isn’t easy, which is why we’re bringing in one of our real estate experts to help. Elyse Sarnecky, our Director of Marketing, has over a decade of experience in this industry. She is here to explain this agent compensation clarification in a way everyone can understand.

“In simpler terms, Fannie Mae is clarifying how seller-paid fees, like real estate agent commissions, fit into their guidelines for contributions towards a buyer’s closing costs.

“Fannie Mae’s Selling Guide allows interested parties, including property sellers, to contribute to the borrower’s closing costs within certain limits (ranging from 2% to 9% of the property value).

“These contributions often help buyers cover expenses like appraisal fees, title insurance, etc. Sellers’ fees as part of local customs, like real estate agent commissions, are not included in these contribution limits.

“So, if a seller or their agent continues to pay the buyer’s real estate agent commission as per local practices, those amounts don’t count towards the contribution limits for the transaction. While there’s no immediate change, they stay vigilant about potential impacts on the mortgage industry.”

-Elyse Sarnecky, Director of Marketing

Relief for Potential Buyers

In light of recent concerns about the NAR ruling negatively affecting first-time homebuyers with paying commission, knowing that total contributions are not limited to 3% offers relief to buyers agents and brokerages that would also be negatively impacted by the new rules. 

This gives everyone hope as the spring housing market goes into full swing and listing agents eagerly prepare homes for the busiest time of the year. 

Elyse Sarnecky quote for buyer commission rules

In Case You Missed the Original Statement

In addition to our hot take on the clarification, here is a snippet from the full notice.

“We are aware of the proposed settlement agreement, subject to court approval, announced by the National Association of REALTORS® (NAR) in the Burnett et al and Moehrl et al cases. While there are no immediate changes to our Selling Guide policies, we are clarifying the current treatment of seller-paid real estate agent fees under our interested party contributions (IPCs) policy.

“Selling Guide B3-4.1-02, Interested Party Contributions (IPCs) permits interested parties (including property sellers) to make contributions to the borrower’s closing costs subject to maximum limits ranging between 2% and 9% of the property value.

“Typical fees and/or closing costs paid by a seller in accordance with local custom, known as common and customary fees or costs, are not subject to the IPC limits described in Selling Guide B3-4.1-03, Types of Interested Party Contributions (IPCs).

“If a seller or seller’s real estate agent continues to pay the buyer’s real estate agent commission in accordance with local common and customary practices, these amounts are not required to be counted towards the IPC limits for the transaction.

“As part of our standard risk management practices, we continuously review and evaluate our Selling Guide policies. We will continue to monitor the various real estate agent commission lawsuits and settlements and evaluate the potential implications to the mortgage industry and our policies.”

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