Changes to Real Estate Transactions Starting August 17th: What You Need to Know

Changes to Real Estate Transactions Starting August 17th: What You Need to Know

As of August 17th, homebuying will involve new procedures due to the recent NAR settlement. These changes alter how real estate agents are compensated and how buyers navigate the process.

Signing an Agreement with Your Agent

Before touring any homes, you’ll be required to sign an agreement that outlines what the agent will do for you. This agreement could be a short-term commitment, like a day or week, or a longer-term contract, depending on your needs and negotiations.

As you get serious about your home search, you’ll officially hire a buyer’s agent. Signing a more detailed contract that spells out the agent’s responsibilities and their compensation. These agreements, whether termed as a buyer agency agreement, buyer-broker agreement, or buyer representation agreement, will now be required in almost all situations.

Negotiating Commission Rates

Just like before, buyers/sellers will negotiate on which party will cover their agent’s commission, known as a seller’s concession. The amount you’ll pay your agent is another area of negotiation. While most agents will continue to charge a commission as a percentage of the home’s price. Real estate brokerages may also start experimenting with flat fees or hourly rates. It’s essential to negotiate a commission structure that works for you. While keeping in mind that some agents might offer more flexible rates, others may stick to their preferred percentage.

Asking the Seller to Pay the Agent’s Commission

When making an offer on a home, you can ask the seller to pay your agent’s commission. This is particularly helpful if you’re concerned about covering earnest money, down payment, and closing costs. If the seller agrees to cover the commission, it could ease the financial burden, making the purchase more manageable.

MLS Listings and Commission Rates

Another significant change is that agents can no longer advertise commission rates on MLS (Multiple Listing Service) for either the buyer's or seller's side. This adds a layer of complexity to the process, emphasizing the importance of clear communication and negotiation between you, your agent, and the seller.

These new rules emphasize the importance of understanding your rights and options as a buyer. The power dynamics in real estate transactions are shifting, giving buyers more control but also requiring them to be more informed and engaged in the process.

Source: NAR FAQ