In March, the National Association of Realtors (NAR) reached a groundbreaking settlement that’s set to reshape the real estate landscape. This settlement not only involves a financial component but also introduces key changes to how real estate transactions are conducted, with a strong emphasis on transparency regarding agent compensation.
Understanding the Impact on Buyers and Sellers
You might be wondering, “How will these changes affect me?” Here’s a closer look at the two main shifts that are making waves:
- MLS Compensation Restrictions:
Buyer broker or agent compensation can no longer be listed on the Multiple Listing Service (MLS). - Mandatory Written Agreements:
Real estate agents must secure a written agreement with homebuyers before they can show any properties.
These changes might sound daunting, but rest assured, the core of real estate service remains the same. Here’s what you need to keep in mind as these rules take effect on August 17, 2024.
For Homebuyers: What You Need to Know
1. Written Agreements Are Now a Must
Before viewing any homes, your agent will need a signed agreement. This doesn’t mean you’re tied down indefinitely. Agreements can be tailored to cover a single property, a specific time period, or longer. When choosing an agent, discuss the various options available and ensure you fully understand what’s included in the agreement.
2. Transparency in Compensation
Your agent’s compensation will be clearly detailed in the agreement. If anything is unclear, don’t hesitate to ask for clarification—and make sure it’s in writing before you sign. Remember, even with these changes, agent fees remain negotiable.
3. Seller Contributions Are Still on the Table
While compensation offers for buyer agents won’t be visible on MLS listings anymore, sellers can still offer to cover some of your closing costs or even the buyer agent fees. Your agent can help you discover if the seller is offering such incentives or negotiate for them during the offer process.
For Home Sellers: Key Considerations
1. You’re in Control of Compensation Offers
As a seller, you retain the power to decide whether to offer compensation to buyer brokers. Discuss with your listing agent the advantages and potential drawbacks of providing such compensation to determine the best approach for your sale.
2. Clear and Transparent Terms
Before any offer of compensation to buyer brokers is made, your listing agent must obtain your approval. Any compensation you choose to offer must be transparent, with all terms laid out in writing, including the amount and how it will be paid.
3. MLS Listing Rules Have Changed
You can no longer advertise buyer broker compensation on the MLS. However, you’re still free to offer other incentives, such as covering buyer closing costs, which can be listed on the MLS.
Moving Forward with Confidence
These industry changes are designed to enhance transparency in real estate transactions, particularly regarding agent compensation. With multiple options available, it’s crucial to understand each one fully. By partnering with a knowledgeable real estate agent, you can navigate these changes with ease and ensure a smooth and successful transaction, whether you’re buying or selling a home.
