Why Including A Buyer’s Agent’s Commission Matters To Minneapolis Duplex Sellers

Have you ever been to a doctor out of your insurance network?

If you’re like me and you knew about it up front, you may have thought twice about going. Perhaps you even looked for a doctor who was in your network.

And if you thought a provider was in your network only to find out after the fact they weren’t, it was likely an ugly surprise.

Basically, Minneapolis duplex buyers are going to have to make those same decisions when it comes to buying a duplex.

While the recent National Association of Realtors (NAR) settlement generates a lot of headlines saying sellers won’t have to pay a buyer’s agent’s commission, in Minnesota that has already been the case for more than two decades. In fact, the buyer’s representation contract between a Realtor and their buyer clearly states the buyer is responsible for paying that agent if the seller’s broker isn’t offering compensation or they are offering less than the buyer agreed to in the representation agreement.

The primary difference with Minnesota’s new listing agreements and buyer representation agreements that go into effect August 17th is real estate brokerages will no longer be able to publish either whether the seller is willing to offer compensation to a buyer’s agent’s broker, nor how much. Instead, the buyers agent will need to contact the listing agent to find out whether this is the case, and at what amount, then share that information with the buyer.

So essentially the buyer’s agent will find out if the duplex that’s for sale is “in network” or “out of network”. If it is “out of network”, they will then be responsible for paying their Realtor out of pocket.

While this has technically been true for decades, the likelihood of buyer’s broker compensation not being offered is likely to increase.

Here’s the catch for sellers. Buyer’s agents commissions have been part of the sales price. The buyers were simply including those costs as part of the purchase price. If they are now in addition to rather than a part of, we may see buyers expect sellers to lower their price by that amount.

Or they simply may not be able to come up with a down payment, closing costs and the buyer’s agent’s commission. Instead, they may decide to look at properties where compensation is being offered.

After all, who wants to pay out of pocket when there’s a way to let the bank do it as part of the loan?