Buying a home is not only expensive, it’s about to get a little more complicated. The National Association of Realtors’ (NAR) settlement of its commissions lawsuit takes effect Aug. 17, ushering in several changes.
The lawsuit was brought by home sellers, who argued that they should not be forced to pay the commission to the agent representing the buyer. Traditionally, the listing agent has split the sales commission with the buyer’s agent.
Under the terms of the settlement, NAR has agreed that it won’t offer compensation to buyers' agents on property listings in the Multiple Listing Service (MLS). Offers of compensation could continue to be an option consumers can pursue but can’t be mentioned on MLS.
Put it in writing
Buyers working with a real estate agent will now be required to have a written agreement before touring a home for sale. The agreement will spell out how the agent will be compensated.
According to NAR, the agreement will provide:
A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
Extra costs for buyers?
There are also changes to how and where real estate professionals may communicate with each other about offers of compensation. These offers are no longer allowed on MLS platforms. Sellers can still offer compensation off an MLS. Sellers can offer buyer concessions on an MLS, such as concessions for buyer closing costs.
Does this mean that buyers, who may be struggling to come up with a down payment, must also budget for a payment to a real estate agent? In some cases, yes.
However, NAR points out that “agent compensation for home buyers and sellers continues to be fully negotiable.” That would appear to suggest that a motivated seller might agree to compensate the buyer’s agent – but that offer could not appear on the MLS property listing.
