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Down Payment Assistance Programs for Buyer Agent Commissions
Does anyone know if there Down Payment Assistant programs in the state of California that also cover the real estate agent commission fee? With the recent NAR settlement, I’m wondering if buyers with no cash on hand may have this as an option if the seller will not agree to a buyer agent fee concession. Thanks.
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7 Replies
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Currently, in California, the scope of Down Payment Assistance (DPA) Programs is usually limited to covering the down payment and closing cost expenses. Still, they usually do not cover real estate agent’s fees, which is the case in most other regions. Sellers usually traditionally incur such fees. However, the way such real estate agent commission cuts are conducted and the conduct of the business, in general, changed after the NAR settlement.
Several points may be helpful about your concerns:
Structure of Real Estate Fees Payment
In quite a number of real estate transactions, the seller usually pays the commission to both the seller’s agent and the buyer’s agent. This is now being disputed, and it could be that some sellers refuse to offer to pay the buyer’s agent.
The NAR settlement still contains a paradigm that may change the dynamics of the payer-agent fee structures.
Down Payment Grants
Although some of these programs, and for that matter, many DPA programs, are provided by the California Housing Finance Agency (CalHFA), such as MyHome Assistance or Forgivable Equity Builder Loan, which focus mainly on the First Home mortgage and certain costs upon signing rather than such burdens as real estate fees.
DPA programs may assist with other upfront costs, such as homeowners’ insurance or property taxes, but not for commissions.
Potential Solutions for Real Estate Commissions
Seller Concessions: In most cases, the seller pays the buyer’s agent commission. However, these events are dealt with in the following way. Some buyers negotiate with the seller to pay a part of the closing costs or, in some instances, even other concessions altogether, which could provide the buyer with agent commission payment if they decide to do so.
It can discomfort buyers with accumulating non-compete and other factual obligations by enabling them to speak for prospective brokerages, asking on their behalf, with permission.
Buyer’s Agent Fee Agreement: Although this is very unlikely and can raise your closing fees, some agents will accept compensation from the buyer’s side towards the buyer’s funds utilized within the total loan package.
Alternatives to Cover Agent Commission
Closing Cost Assistance Programs: These running programs meet that need by rendering limited assistance and releasing funds that would have been morphed into additional fees to cover the agent’s fee.
Gift Funds: For some buyers, especially first-time buyers, agents’ fees can be fully paid using gift funds from family and friends.
NAR Settlement Changes Post-NAR Settlement
The NAR settlement decision outlined some critical issues that may operationalize agent commissions differently in the future. However, what needs to be clarified is how rapidly or how far such changes will translate to the buyers. It is still necessary to keep track of other developments in commissioning and whether new assistance programs will appear as a collateral twist.
What You Can Do:
Reach Out to Local Housing Agencies: Contact the housing authorities or mortgage brokers and ask about new programs and measures developed following the NAR settlement.
Ask Your Agent: It is possible that the seller will not pay the commission to the real estate agent. In such an instance, ask the real estate agent if other innovative ways exist to pay such a commission. With time, some of them may be more flexible during this transitional period.
California’s down payment assistance programs normally do not include commissions on real estate agent’s fees. Nevertheless, there may be opportunities to compromise with the sellers, arrange Commission rates with the agent’s realizing, or use the programs intended for closing costs to pay some of the amounts. Watch for news about the future of NAR and how some of those changes might affect commission practices.
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Thanks for your input. That’s mostly what I assumed the case was with DPA programs. Thanks for verifying.
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Chad, theres EPM DPA PROGRAM. Contact Chritian Sorenson of Equity Prime Mortgage. Forgiveable DPA and you can refinance out of it after six months.
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Thanks for the info, Gus. I will check with him on this.
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Chad, my buddy Bill Burg aka Bill Burger-King @Bill Burg has a very nice beautiful home in Sarasota Florida with an indoor pool, great yard, in an upsale community. $645,000. It was listed for $800,000. Also, Terry Daye has a single family home with a mobile home that is bringing in $1,500 in rent in North Carolina. Both Bill Whopper and Terry Daye are members of GCA FORUMS. The Sarasota, Florida home is 2,575 square ft. and is on the classified ads section. Just for your information in the event if you want some house for the money versus hovering in Orange County, California.
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I will keep that mind. We could definitely get more for our money outside of Orange County, CA, that’s for sure.
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In Arkansas, you can live in a 100 Acre Mansion.