By August 17th, 2024, the real estate industry will undergo a significant transformation in how commissions are paid. These changes stem from a lengthy lawsuit involving the National Association of Realtors (NAR), various Multiple Listing Services (MLS), and real estate brokerages across the United States. We talk about the evolution of the settlement in two recent podcasts of
How To Real Estate Today. You can download these
here and
here.
We want to ensure you’re fully informed about what these changes mean for you, whether you're considering buying or selling in the future. For more detailed information, you can read
this recent post.
Commission + Representation
Ultimately, the settlement formalizes the decoupling of compensation, not the elimination of compensation or buyer representation. Historically commissions were negotiated by the listing agent with the seller and a portion was then shared with a buyer agent. Moving forward, both listing agents and buyer’s agents must now be under contract with their respective clients. Those contracts must include compensation agreements.
Commissions Can Be Paid in Several Ways Moving Forward
- Buyers can pay their agent directly.
- A seller concession to cover the buyer's agent fee can be negotiated into the contract terms.
- A combination of both methods can be used.
Three Key Agreements Will Now Govern Real Estate Transactions
- Listing Agreement: Between the seller and the listing broker.
- Buyer Representation Agreement: Between the buyer and the buyer broker.
- Purchase Agreement: The offer and terms of sale agreed upon by the seller and buyer.
For our buyers, these changes mean that we are required to be under contract with you before showing homes, or we risk facing fines. As part of this contract, we will need to discuss and agree on our fees and services upfront.
For our sellers, this means we will establish a fee for our listing services at the outset, while the buyer-agent commission will become a negotiable aspect of each offer we receive.
As a team, we are committed to negotiating on behalf of our clients, whether on the listing or buying side of a transaction. We fully understand the nuances of these changes and are dedicated to ensuring our clients receive the best possible representation and service.
If you have any questions, give us a ring!
