Important Update for Maine Home Buyers and Sellers: Changes in Buyer Agent Commissions and IPCs

Dated: April 16 2024

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Important Update for Maine Home Buyers and Sellers: Changes in Buyer Agent Commissions and IPCs

Recent clarifications from Fannie Mae and Freddie Mac have provided reassuring news for home buyers and sellers in Maine. In a move that aligns with practices endorsed by the FHA, these government-sponsored enterprises (GSEs) have announced that buyer agent commissions will not be considered part of the allowable Interested Party Contributions (IPCs). This development is crucial for understanding how real estate transactions will proceed under the current regulatory environment in Maine.

Background on Buyer Agent Commissions

In Maine, as in other states, it’s common for property sellers to contribute towards the buyer’s closing costs. These contributions are limited to between 2% and 9% of the home’s sale price and are known as IPCs. Such contributions are aimed at easing the financial burden on buyers at the closing of their home purchase.

Historically, buyer agent commissions — fees paid by the seller to the agent representing the buyer — have been included in these transaction customs. However, there has been ongoing ambiguity about whether these payments should count towards the IPC limits.

Recent Developments

The recent guidance issued by Fannie Mae and Freddie Mac clarifies that these buyer agent commissions will not be counted towards IPC limits. This is particularly relevant following a nationwide settlement reached by the National Association of Realtors (NAR), affecting how commission agreements are presented in the MLS. Even though direct listings of compensation offers will no longer occur, sellers in Maine can still choose to pay the buyer agent's fees.

This announcement is a significant relief for the Maine real estate market, where such fees have traditionally been handled by sellers and are a common practice.

What This Means for Maine Real Estate

For home sellers in Maine, this clarification means that they can continue to support buyers by paying agent commissions without affecting the total amount of IPCs they can contribute. This practice can make properties more attractive to buyers, who may benefit from reduced closing costs.

For buyers, this clarification ensures that the assistance they receive from sellers in covering closing costs won’t be diminished by the inclusion of agent commissions. This can make a substantial difference in the affordability and attractiveness of home buying in Maine.

Looking Ahead

As the real estate landscape continues to evolve, both buyers and sellers in Maine should stay informed about these changes and how they might impact future transactions. Engaging with knowledgeable real estate professionals who understand the nuances of these guidelines will be key to navigating this new terrain effectively.

This guidance from Fannie Mae and Freddie Mac marks a significant development in maintaining the fluidity and affordability of home buying in Maine, ensuring that traditional practices can continue without imposing additional financial burdens on buyers.

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