Source: ABC 7 News —
SAN FRANCISCO (KGO) — The California Association of Realtors routinely updates the forms used by realtors to secure common real estate transactions like buying and selling a home.
However, a change made to the form that specifies how a homebuyer’s real estate agent is compensated is creating confusion among some in the real estate industry. The change has some agents unsure if the homebuyer would be on the hook to pay their agent instead of the seller — that could mean tens of thousands more dollars to bring to the closing table.
There also concern about if that change will push Black and Latinx buyers out of the market-at a time when the gap between white and Black homeownership rate is wider than it was 50 years ago.
The Austin family sunk $400,000 into renovating their home, but were stunned when they barely gained any value during the appraisal process. When they had a white woman pose as the homeowner, that all changed.
In the Bay Area, home prices are declining slightly in 2023 with the average home price still $1.1 million.
If you’re looking to buy a home at that value the minimum amount of money out of pocket would be 3.5% for a down payment on an FHA loan and an additional 3% for closing costs: a staggering: $71,500.
But a new change by the California Association of Realtors to a commonly used real estate form has agents concerned if buyers in the market would be required to put down even more money to the tune of an additional 3%.
“It can be devastating, in my opinion” said Rico Rivera, president of the National Hispanic Organization of Real Estate Associates (NHORA).
Rivera is concerned about the new change to the piece of paperwork called the Seller Payment for the Buyer’s Broker agreement which determines how a homebuyer’s agent is compensated.
“It’s going to impact lower income communities. That’s what I’m really concerned about. I’m more concerned that that wealth gap is going to widen, and this is going to be part of that cause” said Rivera.
The change made to the form by the California Association of Realtors (CAR) is in response to a trio of lawsuits making waves in the real estate industry.