As homebuyers everywhere try to figure out how to pay their agents’ commissions, one Massachusetts bank thinks it has an answer: a line of credit.
Leader Bank, based in Boston’s suburbs, has expanded its home-renovation and moving-cost line of credit product to cover buyer’s agent fees and commission costs up to either $50,000 or 5 percent on the value of their loan.
Nationally-chartered Leader Bank does some home-lending in New Hampshire, but only has a limited local footprint so far.
According to data compiled by The Warren Group, publisher of The Registry Review, the bank made 44 purchase loans on residential property statewide in the first half of this year, with a total loan volume of $19.13 million. Last year, it made 88 purchase loans worth $36.72 million, two-thirds of them in either Rockingham or Hillsborough counties.
According to terms of a half-billion-dollar lawsuit settlement signed earlier this year, NAR real estate brokers and agents across the nation must comply with new negotiating and contract rules that mean most sellers won’t be able to offer a specific commission split as part of the listing. Buyers and their agents will also have to agree to the agent’s compensation before making offers on homes.
The settlement means the question of who pays an agent’s commission will have to be dealt with in a private negotiation with the buyer with some observers fearing a number of sellers may not be willing to pay the buyer’s agent commission at all, as has historically been the case.
Seeing the need to help buyers come up with what could be over $10,000 on top of the thousands they’ve saved for a down payment, Leader Bank has launched a line of credit that allows Leader Bank to pay the broker’s commission directly.
“If you think about a home buyer is buying a home, and with the NAR settlement, they may have to come up with commission out of pocket and not have those funds,” said Jay Tuli, president of Leader Bank. “So, we’ll approve this special line of credit for a certain segment of clients who qualify, and then we can actually cut the check directly to the agent from this line, so the buyer doesn’t have to come up with that money.”
Tuli estimated that this line of credit could cost the average consumer $50 $100 on top of their monthly mortgage bill for a $600,000 home.
Sean Valiton, head of residential lending at Leader, said the bank hopes the line of credit product will help the bank stand out from its competitors.
“I believe that we will have a lot of customer sentiment as it rolls out, and kind of see how everything shifts and what winds up happening,” Valiton said. “We just really want to make sure that there’s options there, and that the real estate agents understand that as a bank, we have this special differentiation, which is the ability to be able to have home equity lines of credit and do things that are innovative like this, to be able to help solve some of the pain points there in the market, or just in easing this shift.”
