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Summary of the Lawsuit
A major lawsuit against the National Association of Realtors® (NAR) and several big real estate companies has recently changed how real estate agents get paid. The lawsuit claimed that some practices around agent commissions were unfair.
As a result, new rules that affect how agents are compensated when a home is sold have been introduced.
Here are some key points to help you understand how the real estate business works today, and you can visit facts.realtor to learn more.
Key Points:
- Two-Agent Transactions: In most home sales in the U.S., two agents are involved—one representing the seller and one representing the buyer. In our market, about 91.6% of home sales happen this way. New regulations are unlikely to significantly impact this reality.
- Seller’s Agent Commission: In the past, the seller and their agent would agree on a commission rate, which has always been negotiable. Even though there’s no fixed rate, many sellers think there’s a standard range, but the commission can be negotiated up until the sales contract is signed. This remains the same under the new regulations.
- Past Buyer Agent Compensation: Before a home was listed on the MLS, the seller’s agent would often offer a commission to the buyer’s agent. Buyer agents could either accept or negotiate this commission. This helped bring more buyers as, again, almost 92% of them come through buyer agents.
- New Rules on Buyer Agent Compensation: Sellers can no longer offer a commission to buyer agents through the MLS. However, sellers can still offer compensation to attract more buyer agents and encourage them to show the property, and this compensation can be advertised outside of the MLS and affiliated software platforms (i.e. yard signage, broker-owner websites, etc.)
- Multiple Listing Service (MLS): Homes for sale are listed on a system called the Multiple Listing Service (MLS), which real estate agents pay to access. The MLS shares these listings with websites and apps that help buyers find homes. Under the new regulation, offers of compensation to buyer brokers can NO LONGER be advertised. This compensation can still be marketed on yard signs and the listing agent’s website(s).
- Best Practices for Sellers: Sellers need to talk with their agents about the benefits of offering compensation to buyer agents. Offering compensation is proven to increase your home’s exposure, bring in more buyers, and help you get the best price. Again, 91.6% of sales involved a buyer broker bringing forward a ready willing and able buyer to the negotiating table.
- Best Practices for Buyers:Similarly, buyers must understand how this new regulation could impact them. Some sellers may be less willing to offer compensation, but a savvy buyer’s agent can still negotiate a win-win for their clients.
To Summarize:
While this new regulation has introduced uncertainty, it’s essential to understand that not much has changed at the most basic level. Professional Buyer and Seller agents will continue to serve their client’s best interests and negotiate contracts on their client’s behalf to help them accomplish their real estate goals.
