NAR Settlement Overview
Roseville, Calif. – As some of you may or may not have become aware, there was a really big lawsuit that took place earlier in the year involving realtor commissions and the industry as a whole. There are some big changes that are about to be implemented in the real estate market and I wanted to take some time as a local real estate professional to make sure that you were educated on the situation and how to prepare yourself going forward.
For starters, let me give a quick synopsis of what the whole lawsuit was even about and what caused it. As a lot of you know, it was common practice for the seller of their property to pay commission to both the seller’s agent (their agent) and the buyer’s agent during the transaction. We have a program specifically designed for real estate professionals called the Multiple Listing Service (MLS) where we post the house we are selling and all necessary and important information pertaining to the home and at the very bottom was the percentage that the seller would be offering to the buyer’s agent. A group of homeowners got together and felt that this was unfair and that the real estate industry as a whole was “price fixing” their commission.
Lawsuit and Results
As a result, they opened a lawsuit against the National Association of Realtors demanding for that to change and they won, and now we have changes to the whole industry that must be implemented by August 17th, 2024. Now, we are no longer allowed to put anything regarding commission into the MLS system and commissions have now become a standard component of negotiation just like something found on a pest report or asking for repairs to be done to the property before closing. I will now cover what this means for you going forward as the consumer and me as your agent.
Sellers
Going forward it is no longer legally acceptable to advertise a buyer’s agent commission on the MLS. However, I want to make this clear that it will still be very likely that you will be asked to compensate the buyer’s agent. Only now, the difference is it will become an active negotiation instead of a predetermined amount. As a seller reading this I am sure that hearing you don’t necessarily have to compensate the buyer’s agent is great news. However, before you get your hopes up too much I will say that I believe being open and willing to compensate a buyer’s agent even by a little bit will be a very useful marketing tactic. I have a scenario I want to talk about to get your wheels turning. Let’s say you have a situation with a first time homebuyer or maybe a seasoned buyer, that is just throwing every penny they have in order to qualify to purchase your home and there is no compensation being offered from your side. Are you ok with losing out on that buyer and letting them walk because they do not have the capabilities to pay their agent out of pocket? Let me hear your thoughts!
Buyers
From now on as a buyer in order to view a property you HAVE to sign a buyer broker agreement that outlines your relationship with your agent and their specific fees. Now, there are multiple types of agreements you can sign and they can all be abolished at any time so if you do sign one do not panic and think that you are permanently bound to that agent. Different types of agreements include for one specific property, multiple properties, or a long term exclusive agreement for any and all properties. My advice is to just make sure to read the agreement thoroughly before signing it and what you are committing to.
If you have any questions at all or want some more clarification please do not hesitate to reach out, all of my information is below and I am more than happy to talk.
About Colby Druckenmiller
Roseville born and raised, Colby Druckenmiller a local real estate agent that brings his passion, experience, and expertise for Placer county and the surrounding cities and counties. You can reach him at 916-918-9594. (DRE#02175857)