As most people have heard through the news or social media, the NAR and plaintiffs have reached an agreement in the previous lawsuit regarding broker commissions. While the NAR believes they are not liable for these claims brought, they concluded that settling was the best path forward for its 1+ million members. Unfortunately, the news has been wildly inaccurate in its reporting of the story. Many major media outlets including some high ranking politicians have implied that 6% commissions were previously fixed at that percentage, and now they are no longer. This information could not be further from the truth. Commissions between Realtors and consumers have ALWAYS been negotiable, and they will continue to be negotiable moving forward. Realtors provide an invaluable service to their clients.
The main change from all of this will be that NAR will no longer allow the buyer’s agent commission to be listed on the MLS. Offers of compensation to buyer‘s agents will still be allowed, along with seller concessions for buyer closing costs, etc. However, these offers of compensation (commission/closing cost credits) will be negotiated off the MLS through consumers and Realtors. It is still extremely important that listing agents and home sellers continue to offer compensation to a buyer’s agent moving forward. With over 95% of consumers using a buyer’s agent to purchase a home, home sellers would lose a massive chunk of their prospective buyer pool by not doing so.
In addition, the settlement has noted that all Realtors who are a part of a local MLS (the majority of Realtors are) will need to enter into a written agreement of buyer representation first before showing a home. This is something that the top Realtors in the business were already doing prior to this settlement. The buyer/broker agreement is to clearly specify the terms such as duration of commitment between buyer and broker, any buyer’s fees owed to the broker, and any other potential compensation the broker could receive.
These new rules will go into effect sometime in mid-July. Not a whole lot is going to change in the flow of business. The main change is that any offers of compensation are no longer allowed to be posted on the local MLS’s, and as was good practice prior, all Realtors must have a written agreement with a buyer client prior to showing any properties.
Please feel free to reach out to me directly at 412-396-9719 with any questions. I am here to help!