The recent lawsuit against the National Association of Realtors (NAR) is set to have a significant impact on home buyers across the country. The key issue is the practice of buyer-agent commissions, where sellers typically pay a commission to both their agent and the buyer's agent. This lawsuit will impact how buyers work with real estate agents and brokers. It’s scheduled to come into effect mid-late July 2024
FOR SELLERS
Selling Today: You decide to sell your home, engage a listing agent, and negotiate the total real estate commission that is split between your listing agent and the buyer’s agent who represents the person buying your home. Through the MLS the listing agent states how much the buyer’s agent receives when your home is sold. For example, you list for 5.0% it’s split 2.5% to the listing agent and buyer’s agent.
Selling In July: You are free to choose how much you will pay the buyer's agent, which may be included on the listing agreement. If you elect to offer them compensation, your listing agent is no longer allowed to publish how much they will receive. The new law states that No Offers Of Compensation to Buyer’s Agent can be published anywhere. Incentive offers directly benefiting the buyer are allowed. Offering to contribute to closing costs or paying for a home warranty are allowed.
FOR BUYERS
Buying Today: It probably feels like having a realtor help you find your home, negotiate its purchase, and work with you through the process of purchasing it is an almost free service. But it isn’t because the owner/seller of the home is paying your realtor. It’s important to know that buyer’s agents are responsible for the sale of most homes?
Buying in July:
1. Unfortunately, no one works for free! Since buyer’s agent commissions will not be offered on MLS listings anymore, and sellers don’t have to pay the buyer’s commission, how will buyer’s agents receive their commissions? The responsibility will fall on the buyers themselves to cover this cost. It should be emphasized that sellers can if they choose, contribute to the buyer’s agent's commission.
2. To work with an agent, you’ll be required to sign a Buyer Broker Agreement that clearly states how much the agent will earn and where that comes from. For Example, you and the agent decide to work together, and you agree they will receive a 2.5% commission for their work. If the seller agrees to pay them 1.0% the balance of 1.5% will be paid by you. What and how the buyer’s agent gets paid will be part of the agreement you sign and is negotiable just like a listing agreement.
