There’s a recent development in the world of real estate that you might find relevant when you are a part of or want to be a part of the market. It’s all about the National Association of Realtors (NAR) settlement agreement that happened on March 15.
Keep in mind that the settlement agreement, presided over by the Sitzer-Burnett trial, is still awaiting approval. As of now, neither has agreed to make changes to its rules that will affect MLS owned by Realtor organizations. But assuming all goes well, it could mean some changes ahead for MLS Realtor organizations.
1. Buyer representation agreement. Agents working with buyers must sign a written representation agreement with the buyer before the agent can show a property listed on an MLS or Multiple Listing Service. As a buyer, you should be very careful when signing this.
Unless it’s inconsistent with federal or state law:
- The representation agreement must disclose the amount or rate of compensation they’ll receive or how this amount will be determined.
- The amount of compensation must be set in an agreement, such as a percentage or dollar amount, and cannot be open-ended.
- The agents can’t receive compensation for brokerage services from any source that totals more than the amount or rate agreed to in the buyer representation agreement.
2. Cooperative compensation. Offers of cooperative compensation can’t be made on the MLS anymore. This means no more showing how much agents get paid on the MLS. Also, agents can’t talk about compensation in any other part of the MLS and cannot make new websites outside the MLS to offer compensation.
Sellers can still offer bonuses to buyers in a special comment section, and agents can still offer compensation to each other, just not on the MLS. They can do this through emails, texts, or other means, but they have to follow certain rules to keep everything fair.
“The amount agents get paid isn’t decided by law, It’s negotiable. In fact, it always has been”
3. Commission disclosure. Agents are now required to disclose broker commissions upfront. They have to do this in three places: listing agreements, buyer representation agreements, and pre-closing disclosures. The amount agents get paid isn’t decided by the law, it’s negotiable… in fact it always has been.
Also, the Realtor boards and MLS have to include this information in all their agreements. This means you’ll know exactly the commission details before diving into any deals.
So, how does this all affect your business? Well, truth be told, I really don’t think it’s going to change a lot. Before you can view a house, you’ll need to sign a buyer’s broker agreement upfront. This agreement will clearly state what you’ll be paying me if you end up purchasing the house. This change will require agents working with buyers to take additional steps to determine the commission, ensuring they can properly advise their clients.
Again, this settlement still has to be approved, and even if the judiciary does approve it, it won’t take effect until at least July 1 of this year.
Got questions? Don’t hesitate to call me or send me an email. I’m here to help you navigate these changes and guide you through your home-buying journey.