August 1, 2024
Back in March, the National Association of REALTORS® (NAR) announced a proposed settlement to end class action litigation of claims brought on behalf of home sellers related to broker commissions. The settlement covered a number of crucial issues, but 2 of them have been the main topic of discussion as they will change the way buyers and sellers work with their agents going forward.
While the deadline for these practice changes to take effect is August 17th, we will have them implemented by August 6th. Here, we break down the key facts and explain what these changes mean for you.
KEY CHANGES
#1 Buyer broker commissions or any offer of compensation to a buyer broker will no longer be advertised on the multiple listing service (MLS).
#2 Buyers must enter into a written agreement with their agent before touring any home, whether in-person or virtually.
BUYERS
Buyer brokers and agents can no longer advertise their services as “free” or “paid by the seller.”
Just like when a seller interviews and chooses an agent to list their property—buyers will have an agreement in place that clearly outlines their agent’s duties and responsibilities and the compensation they will earn upon the closing of a successful purchase. Compensation is fully negotiable by buyer and broker and is not set by law.
Buyer-broker agreements have been around for a long time and have already been standard practice for many agents around the country.
A written agreement is not required while a buyer is doing research, making inquiries, receiving listing updates, or just talking to agents.
Once a buyer is ready to tour homes, they will have options on the type of agreement they sign;
- SINGLE PROPERTY BUYER-BROKER AGREEMENT - Designed for a first meeting between buyer and agent. Great for buyers who want to view one property and are not yet ready to commit to an agent exclusively.
- SHOWING AGREEMENT - Great for buyers who wish to see more than one property with an agent and may meet more than once.
- EXCLUSIVE BUYER-BROKER AGREEMENT - Ideal for buyers who want dedicated representation. This commitment fosters a stronger partnership, providing buyers with expert guidance and unwavering support throughout the home buying process and beyond.
SELLERS
Compensation between seller and listing broker remains and has always been negotiable and is not set by law.
Sellers still have the choice to offer compensation to buyer brokers, but it must be advertised, offered, and negotiated outside of the MLS. Compensation can be advertised and communicated via emails, texts, phone calls, flyers, social media, print ads and sign riders.
Sellers have a new choice to offer buyer concessions, or credit, on the MLS. Sellers can identify an exact dollar amount they are willing to credit back to the buyer at closing, or they can simply state that they will consider a concession if included in an offer. Concessions cannot be conditioned upon use for compensating the buyer's agent.
WHO YOU WORK WITH MATTERS - NOW MORE THAN EVER
These changes underscore the importance of choosing the right real estate professional to guide you through the buying or selling process. With the elimination of advertised buyer broker commissions on the MLS and the necessity of written agreements before viewing properties, the landscape has become more complex. Buyers need a knowledgeable agent who can skillfully negotiate terms and advocate for their best interests. Sellers must now strategize differently to attract buyers, making it crucial to work with an agent who understands these new dynamics and can effectively market properties outside of traditional MLS listings. At Story Group, we are committed to staying ahead of these changes to ensure our clients receive exceptional service and expertise tailored to the evolving market.
Reach out to us today to learn how we can help you successfully navigate these changes and achieve your real estate goals with confidence.