Estimated read time: 2-3 minutes
A class-action settlement by the National Association of Realtors in March has introduced several changes for both home buyers and sellers in the real estate market, effective Aug. 17.
Here's what these changes mean for home buyers
- Agent Agreement: You must sign a written agreement with your agent before touring a home.
- Understanding Your Agreement: Ensure that the agreement clearly states the terms you've discussed with your agent, including the services provided, their cost, and what value you will receive.
- Seller Compensation: Sellers may offer compensation to your agent. This practice is encouraged, but such offers cannot be posted on the Multiple Listing Services (MLS)—local platforms where property details are shared among real estate professionals and the public.
Here is what the settlement means for home sellers
- You still have the choice of offering compensation to buyer brokers like you always have. You may consider doing this as a way of marketing your home or making your listing more attractive to buyers by helping offset some of their costs.
- Your agent must conspicuously disclose to you and obtain your approval for any payment or offer of payment that a listing broker will make to another broker acting for buyers.
It is important to note that the settlement does not affect commission rates, which remain negotiable off the MLS. Agents will continue to receive their commission, which may be a flat fee, percentage, or hourly rate.
Commission negotiations
As always, commissions are negotiable. If your agent is a Realtor, they are bound by the Realtor® Code of Ethics to have clear and transparent discussions about compensation. When choosing an agent, it's crucial to ask about compensation and understand the services you'll receive.
Role of Realtors
Realtors play an essential role in navigating the complexities of real estate transactions, which are often infrequent and complex for most consumers. This profession is highly regulated, requires continuous education and agents are only compensated upon the sale of a property.
Impact on home buyers
The changes might particularly affect first-time buyers who may lack the funds to pay an agent. Buying a home without professional guidance can lead to significant mistakes, such as poor negotiation for repairs, misunderstandings about earnest money, or inadequate home inspections. However, it is anticipated that sellers will see the advantages of assisting with buyer costs like commissions, thereby making home ownership more accessible for more buyers.
Most consumers hire Realtors
Some argue that the role of a real estate agent is merely to tour homes. Yet, 89% home sellers today hire a real estate agent to sell their home, according to data from the National Association of Realtors. The process of buying or selling a home often represents the most significant financial transaction in people's lives. As the real estate landscape has grown increasingly complex and litigious, people rely on Realtors to guide them through legal contracts, disclosure law, property security and negotiations.
