Buyer agents are facing a number of new challenges in the wake of the National Association of Realtors’ historic settlement of lawsuits against the real-estate industry’s commission system.

Three months after implementing various reforms designed to comply with the NAR’s settlement agreements, industry officials in New Hampshire say they’re generally pleased with how commission-related changes are going.

“I think things have gone pretty smoothly,” said Susan Cole, president-elect of the New Hampshire Association of Realtors and owner of Susan Cole Realty Group in Lebanon. “Overall, people have adjusted rather well.”

But Cole and others agree there’s still confusion among some real estate agents about how to handle open houses, negotiate buyer agents’ commissions, deal with sellers who refuse to compensate buyer agents, and other issues.

“People are still finding their feet,” said Cole. “There are still a lot of questions out there.”

‘A New Market’

According to a recent report from brokerage management consultancy T3 Sixty, led by well-known industry expert Stefan Swanepoel, the biggest challenges resulting from the NAR’s settlement of various commission-related lawsuits will indeed occur on the buyer side of the real estate industry.

The T3 Sixty report said the required reforms under the settlement agreements will effectively create a “new market” for buyer agents, a new market in which some agents will adapt to changes and thrive while others will struggle and falter.

A variation of that general assessment appears to be happening in New Hampshire – at least in the early stages of the post-settlement changes.

Under new commission rules, seller and buyer commission agreements must now be negotiated separately, as opposed to the old practice of usually splitting commissions between listing and buyer agents, as agreed upon by the seller of a home.

That separation of commission negotiations now means buyer agents are largely on their own today – and that’s creating more than a little buyer agent angst.

Contract ‘Pushback’

Laura Hallahan, chair of the NHAR’s legal committee and owner of Laura Hallahan Realtors in Bradford, said buyer agent agreements in New Hampshire existed long before this summer’s implementation of new reforms.

But it’s still been hard for some, though not all, buyer agents to adapt to the new system of carefully explaining buyer contracts to potential clients – and then getting those clients to agree to sign buyer agent agreements.

“There’s some pushback by some buyers to sign contracts, as you can understand,” she said. “They’re hesitant to sign agreements.”

Hallahan said it’s critical that buyer agents patiently explain why buyer agent contracts are now legally needed.

“What’s different today is the dialogue,” she said. “There’s more explaining and negotiating going on.”

Buyer Agent Contract Terms

Another problem facing buyer agents: Reaching an actual agreement with buyer clients on how much, and how, buyer agents will get paid.

Real estate leaders say the first option for buyer agents is to call listing agents to see if a specific home seller has agreed to compensate buyer agents after a house or condo is sold.

Under terms of the NAR settlements, seller compensation amounts cannot be listed on local MLSs.

Any seller-approved compensation amount can then be inserted into a buyer agent contract tied to a specific home sale. That’s the simplest scenario for a buyer agent.

But what if a buyer agent and buyer want to sign a broader agreement that covers a number of different sale and commission scenarios, rather than writing up numerous different contracts for each separate home-sale deal?

Mark Lynch, a Realtor at RE/MAX Synergy in Bedford, said he now writes into buyer agreements a “default” commission of 3 percent of a sale price for the buyer agent.

If a seller agrees to a 3 percent buyer agent commission, fine.

But if a seller offers something less, say, 2 percent, then the buyer has to make up the difference – and all of that is stipulated in the buyer agent contract, Lynch said.

“It’s working out well,” he said. “It’s all how you explain things to clients.”

Sellers Balk at Paying Buyers’ Agents

It’s not happening often, but brokers and Realtors report that some sellers are refusing to pay buyer agents anything.

“They’re very confident about their ability to sell their homes,” Adam Dow, CEO of the Dow Group-Keller Williams in Wolfeboro, said of sellers rejecting any payments for buyer agents.

For buyer agents, seller intransigence on compensation is sort of a worst-case scenario, requiring buyer clients to directly compensate buyer agents directly out of their own pockets.

But, again, the solution is to patiently explain how, one way or the other, the buyer would be ultimately paying the buyer agent fee under any sale scenario, whether indirectly via a seller or directly out of their own pocket, industry officials said.

The good news: Most sellers are agreeing to compensate buyer agents, figuring they’ll bring in more potential buyers who can bid up the final sale price of a home, Dow said.

“They understand it’s important to have as many people as possible looking at a house,” Dow said of sellers.

Lower Buyer Agent Commissions?

So far, there’s no solid evidence that the new compensation system is hurting the commissions of buyer agents.

“I haven’t seen it yet,” said Hallahan of lower overall commissions for buyer agents.

But several real estate agents, while agreeing they don’t have the data to say one way or the other whether commissions are off, nevertheless think buyer agent commissions are under pressure.

“My gut is that buyer commissions are down a bit,” said Dow.

He noted that, under the old commission system, listing and buyer agents would often evenly split an overall commission of 5 percent – or 2.5 percent each.

“But now I’m seeing a lot of ‘2’ figures out there,” he said, referring to a lower percentage amount stipulated for buyer agents.

Still, Dow said his instincts tell him that, in the end, the overall combined commissions of listing and buyer agents may end up staying roughly the same.

RE/MAX Synergy’s Lynch said the services of buyer agents will still be needed by many, if not most buyers, and he expressed confidence that the commission system will work itself out favorably over time.

Open House Confusion

With all the recent changes, there’s been less confusion on the seller-agent side of the equation.

But there have been some bumps on the road for seller agents, such as confusion over what to do if someone without a buyer agent shows up at an open house.

Some seller agents have reacted by insisting that unrepresented potential buyers need to sign a buyer agent agreement right then and there at an open house.

But that’s not necessary, said Hallahan.

Such people are only potential customers – and can be treated as such, she said. “There’s no need to sign them up to a buyer agreement,” she said.