In the wake of the recent National Association of Realtors (NAR) settlement concerning buyer agent commissions, Fannie Mae and Freddie Mac, companies that guarantee most of the mortgages in the US, have issued an important statement. They announced that they will not count buyer’s agent commissions as part of their interested party contributions (IPCs). This comes as a relief to buyer agents who have been apprehensive about buyers potentially having to cover agent commissions without assistance from sellers, separate from the costs associated with obtaining a mortgage loan.
According to the selling guidelines of Freddie Mac and Fannie Mae, buyers can typically request seller concessions towards the borrower’s closing costs, capped at a maximum of 2% to 9% of the property value. However, the inclusion of buyer agent commissions within these concessions could pose a hindrance.
In their recent statement, Fannie Mae and Freddie Mac clarified, “Buyer agent fees have historically been fees customarily paid by the property seller or property seller’s real estate agent, and, as such, they are currently excluded from these financing concession limits. If these fees continue to be customarily paid by the property seller according to local convention, they will not be subject to financing concessions limits.”
This decision is poised to alleviate concerns among buyer agents and ensure that buyers can still access necessary financial assistance in covering agent commissions within the framework of mortgage loans.
The implications of this statement are significant for both buyers and buyer agents. It ensures that buyers can continue to receive seller support for buyer agent commissions without that support counting towards the caps on seller concessions. Additionally, it reaffirms the role of buyer agents in real estate transactions and underscores the importance of their compensation within the broader ecosystem of home buying.
Intercap Lending is a direct Fannie Mae and Freddie Mac lender with the ability to originate and underwrite GSE loans. Intercap loan officers can assist buyer agents with their clients’ purchase offers under these guidelines. Please contact an Intercap loan officer for more information.
Sources:
1. National Association of Realtors (NAR) Settlement: https://www.nar.realtor/newsroom/nar-reaches-agreement-to-resolve-nationwide-claims-brought-by-home-sellers
2. Fannie Mae Statement: https://singlefamily.fanniemae.com/news-events/selling-notice-real-estate-commissions-and-interested-party-contributions
3. Freddie Mac Statement: https://guide.freddiemac.com/app/guide/industry_letter/04-15-2024