You may have heard about the settlement entered into by the National Association of Realtors (NAR) along with several major national brokerages. There is a lot of confusion about what this means to both home buyers and home sellers. You can in general think about the changes in two main areas.
Buyer Agreements
First, written buyer agreements are now required and must meet certain criteria, some states such as Idaho, already required buyer agreements. However, this settlement does expand upon that requirement. Buyers and their agents will need to reach an agreement regarding how the agent will be compensated for their services and put it in writing prior to touring a home.
Seller Compensation
Second, offers of compensation (when a seller or a seller’s agent makes an offer of commission to a buyer’s agent) can no longer be posted on Multiple Listing Services (MLS). Most sellers are still offering compensation to buyer agents that bring offers on their homes. Those amounts are negotiable and not set by law, which has always been the case but may not have always has been well known. The amount a seller is offering to buyer agents now will need to be conveyed by means outside of the MLS system, such as phone calls, texts, emails or independent web sites.
One item to remember about all of this, is these are not laws or regulations that have been set by state agencies, or at a federal level. These are stipulations to which the National Association of Realtors and other large real estate companies agreed to settle a class action lawsuit. But since the vast majority of residential real estate agents are members of the NAR, you will see this be the standard of practice.
There has never been a commission amount that was set by law required to be paid by sellers; there has never been a regulation that sellers had to pay the buyer’s agent. But there are minimum amounts set by real estate companies or agent’s policy they required to accept a listing, that has been the case and has not changed. But I believe you will see more negotiation on fees as consumers have become more aware that is a possibility. However, so far there appears to be little change in commission amounts. There have been alternative types of real estate companies, such as Lowes Flat Fee Realty that provided lower cost flexible options, and are a great way to save the most money in selling and buying real estate.
Commissions
Sellers, in most cases, will still offer or agree to pay the buyers agent. Why would they do this if it is not some sort of requirement? There are at least a couple of reasons; first as an incentive for agents to show and try and sell their homes. It can also play a strong part in negotiation with buyers, who may not have the funds to pay their agent along with their other closing costs and down payment. Also to compete with other home choices where the seller is paying the agent’s
fee. And lastly, and perhaps the worst reason but still a strong one: “that is the way it has always been done.”
One change that you will notice if you are writing an offer on a home, is the commission being paid to your agent as a buyer will be addressed in that offer. As a buyer you are ultimately responsible for your agent’s commission. You can ask the seller to pay it, and many sellers will have offered a certain amount already, but you are going to need to discuss it with your buyer agent and come to an agreement. This is quite a change from buyers often not even having an awareness of how or what their agent was being paid.
So bottom line, as a result of this huge settlement you will see changes, but in practice the core of the business of selling property remains the same; sellers are most often going to be paying both agents in the transaction, but done in a more transparent manner.
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