A significant change in the real estate industry took effect on August 17, 2024, as a result of a landmark settlement involving the National Association of Realtors (NAR). This new law fundamentally alters how real estate agent commissions are handled during home sales, with several key changes:
- Separation of Buyer and Seller Commissions: Previously, it was common for the home seller to cover both their agent’s commission and the buyer’s agent’s commission, typically amounting to 5-6% of the sale price, which was split between the two agents. Under the new rules, sellers are no longer required to pay the buyer’s agent’s commission. Buyers will now need to negotiate and cover their agent’s fees directly.
- Mandatory Written Agreements for Buyers: Real estate agents working with buyers are now required to have a written agreement in place before showing homes. This agreement must clearly outline how the agent will be compensated, which is a shift towards greater transparency in the real estate process.
- Changes to MLS Listings: Offers of compensation will no longer be listed on Multiple Listing Services (MLS). These platforms, which agents use to share property information, will no longer include details about commission offers, meaning these discussions must occur directly between the agents and their clients.
These changes are designed to increase transparency and consumer choice in real estate transactions, allowing buyers and sellers more flexibility in how they handle commissions. However, they also require buyers to be more prepared to discuss and negotiate their agent’s fees directly, which could impact the overall costs of buying a home.
