The only thing certain is change, and this time we have good news to share with you about the ability for buyers to request a credit from the seller to use towards buyer agent compensation.
In the past, we shared a matrix of the maximum allowable percentage of the sales price your client can request to cover closing costs and prepaid items, which at the time included buyer-agent compensation. Earlier this week, new guidance was provided by both Fannie Mae and Freddie Mac along with FHA. Their guidelines allow for seller credits to pay real estate agent compensation provided that it is customary for the seller to do so, and to not include this in a cost that the interested party credits would cover.
Sounds like a mouthful, so what does this mean for you?
Your buyer can now request the maximum amount of allowable closing cost credits to use towards their loan transaction AND request a portion or all of the buyer agent compensation as a seller credit.
Let’s do an example of a $300,000 sale price, the buyer’s offer is for a conventional loan, 5% and the seller is offering 1% co-operative payment to the buyer’s agent. The buyer’s agent has an exclusive buyer’s agreement signed for 2.5%.*
The buyer could ask the seller for:
Reference this handy matrix here, which illustrates the maximum amount you can request based on the type of loan (conventional, FHA, VA, non-conforming), the occupancy type and the loan-to-value ratio.
Communication with your loan officer on any potential purchase that would require a credit now is more important than ever to ensure the client can qualify for the loan using all the available credits based on the loan and agent compensation structure.
In today’s environment, demonstrating to your clients that you have a team of professionals behind you shows your winning difference as their trusted real estate professional. If you don’t have a Key Mortgage loan officer to partner with, simply reply to this email and we’ll get you connected with one today!
*This scenario is an example created for educational and illustrative purposes only. All loans are subject to credit approval. Interest rates are subject to change due to market conditions. Please contact your loan officer for details.
