Changes in Real Estate Compensation: What You Need to Know

You may have heard about the recent changes in how real estate compensation is paid. The National Association of Realtors, along with several large real estate companies, recently met the requirements of a settlement that will provide greater transparency on how real estate agents can be paid, which is beneficial for both buyers and sellers.

It's important to note: There has never been a standardized fee in real estate, and the settlement does not set or reduce fees that a real estate company can charge.

Key Changes to Real Estate Practices Starting August 2024

Changes in Compensation Disclosure:

Sellers and their agents will no longer be allowed to designate a compensation to buyers’ agents on the MLS (Multiple Listings Service). This doesn’t mean that compensation cannot be paid; it simply cannot be published in any MLS field.

Buyer-Agent Agreements:

Buyers will be required to sign a written agreement with an agent before viewing homes. This agreement will detail the agent’s fees and who is responsible for paying them, as well as clarify the agent’s duties to the buyer. The buyer can still instruct the agent to negotiate with the seller to cover this compensation.

Important Considerations for Home Sellers

Offering Compensation: The settlement does not prevent you from offering a compensation to buyers’ agents. It is likely still advantageous to offer compensation to attract more buyers and better offers.

Workload Distribution: A buyer’s agent takes on significant responsibility, which could otherwise fall to the seller’s agent. Without a buyer’s agent, the seller’s agent might charge more to cover the additional workload.

Compensation Payment: There is a good chance that buyers’ agent compensation will still be covered through the sale proceeds.

Buyer Expectations: If a buyer does not have an agent, they might expect a lower price.

Increased Liability: Dual agency (one agent representing both buyer and seller) could increase liability, which is a common cause of lawsuits.

Important Considerations for Home Buyers

Protection of Interests: Working with a buyer’s agent ensures your interests are protected. Historically, buyers without representation were often unaware that the seller’s agent did not represent them.

Mandatory Agreement: You will need to sign an agreement with a buyer’s agent before viewing homes.

Professional Recommendations: A buyer’s agent can recommend lenders, attorneys, home inspectors, and other service providers.

Contract Assistance: A buyer’s agent can help with contract preparations and negotiations, including addressing issues found during home inspections.

Price Expectations: Don’t expect sellers to drop their price if they’re not paying a buyer’s agent. Prices are based on comparable sales and market conditions.

Going Solo: Navigating the home buying process alone can be challenging. Finding the right house, understanding market trends, negotiating contracts, and managing the paperwork are not as simple as they might seem.

Your Next Steps

Photography By Kaytlyn Perez Photography

If you have any questions or concerns about these shifts, feel free to reach out to me. I will always be here to help.

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By understanding these changes and how they affect you, you can navigate the real estate market more effectively. Whether buying or selling, staying informed is the key to making the best decisions for your situation.