The real estate industry is changing.  The settlement with the National Association of Realtors, or NAR requires these changes take place by August 17, 2024. This video hits two key changes and some misconceptions many people have due to some of the information that is being circulated.

There are two main changes: 

  1. The first change primarily affects Realtors.  The Multiple Listing Service, or MLS can no longer state if, and how much, a seller is willing to offer towards compensation for a Buyer’s Agent.  This means that brokers need to contact the listing agent to see what compensation a Seller is offering because it’s no longer a data point in the MLS. 
  1. The second change is that Buyers now must sign an agreement with an agent before touring any property. That’s right, the MLS rules will now state that agents cannot show properties unless this form is signed.  In the past, these Buyers Agency Agreements were used, but compensation typically came from the seller. A buyer was rarely obligated to pay for these services.  Now, if the seller is offering a different compensation than what the buyer and their agent agreed to, the Buyer may be obligated to pay the difference. Thus, the biggest change will be that these compensation discussions need to happen at the start of the house hunting process instead of during or at closing. 

You’ve probably heard about more changes, but they likely fall under the umbrella of these two modifications.  So, let’s address some of those questions now:

1. Some of the media has said commissions are being eliminated and home prices will drop. That is not the case. If you elect to use a real estate professional, these services require compensation. While commissions have, and always will be negotiable, they are not going away and regardless of the commission amount, home prices will likely not drop.

2. Another media talking point is that Seller’s don’t have to pay the Buyer’s agent compensation. In reality, Sellers have never been obligated to pay a buyer’s agent. But there are advantages for sellers to pay a co-op compensation.  By offering co-op compensation to the buyer’s agent, this allows potential buyers to put more money towards the purchase of the home, and thus potentially attracting more buyers. In addition, if other sellers in your area have decided to offer this compensation, one could even the playing field by offering a similar compensation. Given this, brokers will have to do more preliminary research for buyers before touring homes to determine compensation amounts.  Knowing these compensation amounts allows buyers to better understand their overall buying power. If a seller is not offering a buyer’s agent compensation, then that buyer is obligated to pay their agent for their services. 

To summarize, the real estate industry is changing . . . a bit.  These changes will increase transparency within the industry, which is great. How these changes really play out has more to do with the local economy, and the motivations of sellers and buyers.  What we can say is this, real estate is one of the largest purchases most people ever make, so please take this process serious and align yourself with a true professional that has your best interest at heart. 

Charlie