The National Association of Realtors (NAR) agreed to make policy changes in order to resolve multiple class-action lawsuits brought on behalf of home sellers nationwide.
One of the most significant changes has to do with agent commissions. As of August 17, 2024, real estate brokers listing a home for sale on any of the NAR-affiliated databases will no longer be allowed to include offers of compensation for a buyer’s agent.
This change was designed to address a key assertion in the lawsuits that homeowners were being forced to pay artificially inflated agent commissions when selling their home.
While real estate agent commissions have always been negotiable, this change might only serve to move half the commission fee from the seller to the buyer. As a result, the buyer might try adding the fee to their negotiations as a concession. In that scenario, the net result would be moving around the same dollars.
NAR also agreed to require that buyer’s agents enter into a written agreement with their clients. The purpose of the agreement is to ensure homebuyers know upfront what their agent will charge for their services.
“It’s hard to say how much these changes will affect home sales,” said Chad Gray, Luxury Home Broker Associate at Luxury Living Fort Lauderdale | Compass. “There will likely be an adjustment period as sellers, buyers and agents figure out how best to navigate this new scenario. However, I feel savvy home sellers will see the benefit of continuing to offer a commission to buyer’s agents.”
How this might affect home buyers
Typically, homebuyers haven’t had to pay their agents. While that’s more likely to happen with the new changes, it might not always be the case.
Sellers can still offer compensation to a buyer’s agent. Some will and some won’t. Either way, agent commission information cannot be shared in the Multiple Listing Service (MLS).
As a result, a buyer’s agent will need to work offline to determine which properties listed for sale offer compensation, so the information can be shared with their client. If a property of interest offers commission, then the buyer will not need to pay their agent’s fee and might have more money to put towards the purchase.
This is where the written agreement will play a key role. It should specify the responsibilities of the buyer’s agent and their fee. The agreement may also need wording that says if a seller doesn’t offer a buyer’s agent commission that the buyer will be responsible for the fee.
How this might affect home sellers
Home sellers have the option of keeping the former commission structure of 5 to 6%, evenly split between a buyer’s agent and the seller’s agent.
Under the new rules, sellers don’t have to follow that structure. Instead, they can negotiate different options, like not offering a buyer’s agent commission.
Keep in mind that lower cost options like flat rate brokers, discount brokers and For Sale By Owner have been in the marketplace for quite some time. However, options like those haven’t garnered a very large share of the South Florida luxury real estate market.
