You've probably heard the news about changes coming to how real estate commissions are paid. The National Association of Realtors and several large real estate companies recently proposed a settlement regarding the payment of real estate commission. Of course, after the proposed settlement, the sensational headlines began.
"Real estate commissions are being slashed!"
"Selling your house will now be less expensive!"
"No more paying 6% to real estate agents!"
Most of the headlines are completely misleading. There has never been a standard fee in real estate and there's nothing in the settlement that sets or reduces the fees a real estate company can charge. However, there will be more transparency, which is a good thing.
As part of the proposed settlement, the following practice changes will be implemented.
1) Starting in July 2024, sellers and their agents won’t be allowed to offer a commission to buyers’ agents in the MLS listing. That doesn’t mean a seller or a seller’s agent can’t pay buyers’ agents a commission; it just can’t be published in any field in the MLS.
2) Also starting in July 2024, buyers will be required to sign a written agreement with an agent before they view homes. The agreement will require full disclosure of how much the agent charges and who will pay them. It will also clarify the agents’ duties to the consumer. It doesn’t mean the compensation has to be paid out of the buyers’ pocket; the buyer can instruct their agent to negotiate with the seller to cover it.
The National Association of Realtors and The State of Colorado have always encouraged buyer agreements for years.
Things to consider if you are selling a home:
• The proposed settlement doesn’t mean that you can’t offer a commission to buyers’ agents.
• It will likely still benefit sellers to offer commissions to buyers’ agents to get the most exposure for their home and the best offers possible.
• A buyer’s agent will take half the work or more off the seller’s agent’s plate. If the seller’s agent must do the work of two agents, they might charge more.
• There’s a good chance that buyer agent commissions will still be paid through the proceeds of the sale.
• If you’re selling to a buyer who doesn’t have an agent representing them, they’ll likely expect you to drop your price.
• It could increase liability when an agent represents both the buyer and the seller on the same transaction, which is one of the leading causes of lawsuits in the industry.
Things to consider if you are buying a home:
• Working with a buyers’ agents will ensure your interests are protected. Years ago, buyers didn’t have an agent representing their interests and were often unaware that the seller’s agent represented the seller’s interest and not the buyer’s.
• You will now have to sign an agreement with a buyer’s agent before viewing homes.
• A buyer’s agent will be able to recommend lenders, attorneys, home inspections and other settlement services providers.
• A buyer's agent will be able to assist you in contract preparation and negotiation, including handling items that might be revealed on an home inspection.
• Don’t expect sellers to drop their price if they aren’t paying a buyer’s agent. Sellers will base their price on recently sold comparable sales and market conditions.
• If you go it alone, know that finding the right house, understanding market values, negotiating deals, and handling everything involved isn’t as easy as it may sound.
The best thing to do if you’re curious or concerned about the coming changes is to reach out to me! I’m always happy to answer questions!
Chelsea Steen Realtor
740-334-9898
Photo Credit: Kaytlyn Perez Photography