Last October I gave a rundown on the legal battles in the real estate industry around how commissions are paid, and a few potential scenarios for how things could play out. Now that the National Association of Realtors has come to a settlement agreement on these lawsuits, I am hoping to provide some clarity regarding the implications if you plan to sell your home and/or buy one in the future.
The main premise of the settlement is that buyer agent compensation should not be decided by the listing/seller agent, though some aspects of what that actually means are subject to interpretation, and there is a fair amount of inconsistency in how agents and brokerages are choosing to operate going forward. Here are the main things you need to know:
It is now required that all buyers have a written contract for buyer representation that states the services their agent is providing and the agent's fee for these services, which will be the direct responsibility of the buyer. (Prior to the NAR settlement, sellers contracts with their listing agents typically covered fees for both the seller's agent and the buyer's agent.)
However, sellers are still allowed to provide financial concessions to their buyers, which may include covering buyer agent compensation. Likewise, buyers are allowed to negotiate with sellers directly regarding payment of their buyer agent’s fee. Effectively, what this means is that a buyer's offer may include a condition that the seller cover all or part of this fee as one of the terms of the sale -- similar to having a financing or home inspection contingency. So far, what we're seeing in the field is that this seems to be the most common scenario, and these offers with buyer agent fees written in are being accepted by sellers.
Our local MLS (MLSPin) has maintained a field for offers of buyer agent compensation, and some agents are continuing to publish specific offer amounts in their listings, though any amount offered is still considered negotiable, so should be taken with a grain of salt, as the seller may elect to raise, reduce or even entirely remove their offered compensation for the buyer agent at any point in the offer negotiation process.
So those are the main points. If you have any specific questions about my approach and/or would like some guidance as you plan for a home sale or purchase, please feel free to reach out and I'd be happy to discuss. In the meantime, happy fall!
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