07/29/2024
𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐖𝐨𝐫𝐥𝐝: 𝐖𝐡𝐚𝐭 𝐁𝐮𝐲𝐞𝐫𝐬 𝐚𝐧𝐝 𝐒𝐞𝐥𝐥𝐞𝐫𝐬 𝐍𝐞𝐞𝐝 𝐭𝐨 𝐊𝐧𝐨𝐰
𝐁𝐫𝐚𝐜𝐞 𝐲𝐨𝐮𝐫𝐬𝐞𝐥𝐯𝐞𝐬—𝐦𝐚𝐬𝐬𝐢𝐯𝐞 𝐜𝐡𝐚𝐧𝐠𝐞𝐬 𝐚𝐫𝐞 𝐜𝐨𝐦𝐢𝐧𝐠 𝐭𝐨 𝐭𝐡𝐞 𝐫𝐞𝐚𝐥 𝐞𝐬𝐭𝐚𝐭𝐞 𝐰𝐨𝐫𝐥𝐝 𝐭𝐡𝐚𝐭 𝐰𝐢𝐥𝐥 𝐫𝐞𝐯𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐢𝐳𝐞 𝐡𝐨𝐰 𝐰𝐞 𝐛𝐮𝐲 𝐚𝐧𝐝 𝐬𝐞𝐥𝐥 𝐡𝐨𝐦𝐞𝐬...
or maybe not?
The real estate world is buzzing with some major updates that have everyone talking. The National Association of Realtors (NAR) has announced new policy changes, and if you're buying or selling a home, you need to know what’s coming. There's been a whirlwind of speculation about how these changes will shake things up. I'm going to give my take and why I think they might not be as dramatic as many are making them out to be.
First things first: what are the changes and when will they take effect? August 17, 2024 is the official date, though many changes are already rolling out.
As for the changes:
𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐟𝐨𝐫 𝐁𝐮𝐲𝐞𝐫𝐬
1) 𝐖𝐫𝐢𝐭𝐭𝐞𝐧 𝐀𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭 𝐁𝐞𝐟𝐨𝐫𝐞 𝐓𝐨𝐮𝐫𝐢𝐧𝐠: From now on, buyers must sign a written agreement with their agent before touring any property. It might sound like extra paperwork, but it’s just to make sure everyone’s on the same page.
2) 𝐂𝐨𝐦𝐩𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐃𝐢𝐬𝐜𝐥𝐨𝐬𝐮𝐫𝐞𝐬: Buyers will now have access to clear information about how brokers are compensated.
𝐂𝐡𝐚𝐧𝐠𝐞𝐬 𝐟𝐨𝐫 𝐒𝐞𝐥𝐥𝐞𝐫𝐬
1) 𝐍𝐨 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐝 𝐂𝐨𝐦𝐩𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐎𝐟𝐟𝐞𝐫𝐬: Sellers are no longer required to make offers of compensation to buyer brokers in the MLS. This means you can offer any amount you want, including zero. But more on that in a bit.
2) 𝐄𝐥𝐢𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐂𝐨𝐦𝐩𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐅𝐢𝐞𝐥𝐝𝐬: All those pesky compensation fields and info will be gone from the MLS.
3) 𝐂𝐨𝐦𝐩𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧 𝐃𝐢𝐬𝐜𝐥𝐨𝐬𝐮𝐫𝐞𝐬: Just like buyers, sellers will also get clear disclosures about compensation arrangements.
𝐌𝐲 𝐓𝐚𝐤𝐞 𝐨𝐧 𝐓𝐡𝐞𝐬𝐞 𝐂𝐡𝐚𝐧𝐠𝐞𝐬
There has been much sensationalizing of these changes from both those in and outside the real estate industry. However, I don't anticipate much of a departure from current practices. Though sellers will now be expressly informed about their ability to offer any amount (including zero) for buyer agent compensation, I believe most agents will continue to encourage sellers to offer this to increase exposure of a listing, particularly if the home would potentially be purchased by a first-time home buyer.
As far as claims that this will only make purchasing more difficult for first-time home buyers who may be limited on the ability to come up with additional funds for compensation of a buyer agent, I don't believe this will generally be the case. Though the discussion about compensation must take place, there is nothing that prohibits a buyer's agent from asking about buyer agent compensation offered by the seller. The buyer can have the option to not make an offer on any property not offering a buyer agent commission where they would need to come up with additional funds out-of-pocket.
That's it. While many have made these changes out to sound like a big deal, the reality is that these will likely be minor things that have been put in place to make agent compensation more transparent and straightforward for clients.
As always, if you have any questions or need more information, feel free to reach out!
Happy house hunting (or selling)!
