The role of a real estate agent is fundamental in the active world of real estate. Real estate agents are a trusted source of advice; they stand ready to help their clients navigate the process of selling or buying a home. They offer invaluable assistance that enables clients to make informed decisions that achieve desirable outcomes.
You may have read or heard about the changes in our real estate industry. The recent settlement involving the National Association of Realtors (NAR) brings several key changes to real estate practices aimed at increasing transparency and competition. You may be wondering what the key changes are and how they will affect you as a buyer or a seller. Although the information can be confusing for consumers, we have a better understanding of the new rules, thanks to the information provided by NAR. Here is a breakdown of the main changes.
Key changes
MLS rule: Listings in the MLS will no longer list compensation.
Buyer agreements: Buyers will be required to sign written Buyer Broker Agreements.
MLS rule
As of August 17, 2024, MLS participants are prohibited from communicating any offer of compensation via the MLS. All broker compensation fields will be eliminated on MLSs opting into the settlement practice changes.
The settlement empowers consumers with choices when it comes to services, compensation, and marketing strategies that meet their needs. Real estate professionals should work with sellers to ensure they fully understand their options, including the ability to make offers of compensation off-MLS to brokers working with buyers.
The settlement expressly preserves offers of compensation as an option when agreed upon by the consumer and the broker. Offers of compensation are good for buyers and sellers and help make the path to homeownership accessible for all buyers, especially first-time, low income, and other underrepresented homebuyers.
Compensation Agreements - Changes for buyers and sellers
Detailed buyer/broker agreements are now mandatory when working with buyers. Parts of the country already use a compensation agreement, and this doesn’t seem to be all that different. Agents working with buyers must enter written broker buyer agreements with their client before the client tours a home. Buyers may benefit from these more transparent negotiations and their clearer understanding of their financial commitments by signing the agreement. While this does add a layer of complexity to the process, this step makes all parties involved in a transaction fully aware of all the financial aspects.
However, that does not mean that buyers will be the only ones that can pay their agent. Sellers can still offer compensation, and buyers can still accept. Sellers can agree to pay the buyer’s agents/ broker compensation in the traditional way.
Here are a few options for buyers:
There are a few ways in which a buyer’s broker/agent can be compensated. The types of compensation can include things such as a portion of the listing broker’s compensation, fixed fee or percentage commission paid directly by the buyer, or commission to be directly from the seller.
Here are a few options for sellers:
Homeowners can stay competitive by offering attractive compensation to their listing agents. Sellers can disclose up-front and in writing what compensation, if any, that they will be offering to the buyer’s agent. Sellers can offer the traditional compensation to the buyer’s agent, or they can offer a concession to the buyers. The buyers can then use the concession to compensate their agent or pay for other expenses, such as repairs and closing costs.
The thought is that sellers and buyers will benefit from the transparency brought by these new rules. Potentially, this will lead to smoother transactions and enhanced trust with buyers. Buyers and sellers should communicate closely with their agents to ensure that they understand these new rules and how best to navigate them. The commission has always been negotiable, and it remains so between brokers/agents and their clients.
It may take time for real estate agents, homeowners and buyers to adjust to the new rules. Now, more than ever, information will be key. Both buyers and sellers should educate themselves regarding these new rules. Choosing and working closely with an informed and experienced real estate agent will be paramount in home buying and home selling success. If you would appreciate receiving more in-depth information on the changes mentioned above or if you have any other luxury real estate market questions, please feel free to email me now at [email protected] or call me at 941.266.0529.
