How the New Rules of Real Estate Will Impact Buyers and Sellers

How the New Rules of Real Estate Will Impact Buyers and Sellers

The National Association of REALTORS® (NAR) recently settled lawsuits regarding real estate commissions, agreeing to pay $418 million and implement nationwide changes to Multiple Listing Services (MLS) while denying any wrongdoing. Here’s what you need to know:

Sellers are prohibited from offering compensation on Multiple Listing Services.

• Sellers still have the choice of offering compensation to buyer brokers, which can serve as a way of marketing the home or making the listing more attractive to buyers, but it cannot be included on the MLS.

Buyer representation agreements are required before touring homes.

• The agreement should clearly outline the terms agreed upon between the buyer and their agent, ensuring the buyer understands the services provided, their value, and the associated costs.

Broker compensation continues to be fully negotiable.

• Buyers will be responsible for paying their own commissions, and sellers will be responsible for theirs.

Ralph’s Take

Who you work with matters. The new buyer representation agreements will outline your relationship with your broker and must include the buyer broker commission. However, it's important to note that financing a commission isn’t practical, as banks would treat it as a personal loan, leading to higher interest rates, increased liabilities, and a tougher time qualifying for a mortgage. Buyers can (and likely will) request the seller cover their agent’s commission or request a closing concession when submitting purchase offers.