On March 15, the National Association of REALTORS® (NAR) reached a significant agreement that resolved ongoing litigation concerning broker commissions for home sellers. This settlement not only puts an end to legal disputes but also introduces changes to the real estate transaction process, ensuring that consumers retain various options for real estate services. These changes officially took effect on August 17, 2024.
New Requirements for Real Estate Agents
One of the major updates affects how real estate agents who list properties on Multiple Listing Services (MLS) must operate. Going forward, agents are required to enter into written agreements with buyers before they can tour a home. Here’s what you need to know about these agreements:
Compensation Disclosure: Agents must disclose the amount or rate of compensation they will receive, or explain how this amount will be determined.
Objective Compensation: The agreement must specify straightforward compensation (e.g., a flat fee, a percentage, or an hourly rate), avoiding vague terms like “buyer broker compensation will be whatever the seller offers.”
Prohibition on Excess Compensation: Agents cannot receive compensation from any source that exceeds the amount agreed upon with the buyer.
Negotiability of Fees: A clear statement must be included, indicating that broker fees and commissions are negotiable and not set by law.
NAR has long advocated for the use of written agreements, emphasizing that they help clarify the services provided, along with the associated costs and responsibilities. Several states already have laws in place that require these agreements.
Changes in Communication and Offers
In addition to the new written agreement requirements, there are updates on how real estate professionals communicate about compensation. Notably, offers of compensation can no longer be posted on MLS platforms. However, sellers still have the option to offer compensation outside of the MLS, including buyer concessions, such as assistance with closing costs.
What This Means for Buyers and Sellers
Here’s a quick rundown of what home buyers and sellers should keep in mind:
For Buyers: If you’re working with an agent using an MLS, you will need to sign a written agreement before touring a home. This ensures you understand the services provided and the associated costs.
Virtual Tours Included: Written agreements are mandatory for both in-person and live virtual tours.
No Agreement Needed at Open Houses: If you're simply inquiring about an agent's services at an open house, a written agreement isn’t necessary.
Negotiable Compensation: The compensation for agents remains fully negotiable, so don’t hesitate to discuss this with your agent.
Ask Questions: When selecting an agent, be proactive! Inquire about their services, compensation, and the new written agreement process.
These changes represent a significant shift in the real estate landscape, promoting transparency and providing consumers with more control over their real estate transactions.
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