The National Association of Realtors (NAR) is kind of a big deal in the real estate world and it’s America’s largest trade association. There’s been a lawsuit that has been shaking things up and leading to some mandatory changes in the industry. The lawsuit has brought attention to how buyer agent compensations work. To address these issues effectively immediately, we will see some changes to make things more transparent for everyone involved.  Let’s look at what this means:

 

WHAT HAS NOT CHANGED:

~ Compensation remains fully negotiable between buyers, sellers, and their agents. 

~ Agent compensations can be paid by the buyer or the seller.  

~ No one wants to work for free.

 

BUYERS:  A BUYER’S REPRESENTATION AGREEMENT IS REQUIRED BY LAW!

Whether for a single home showing, multiple showings in a specified market area, or a certain period, a Buyer’s Rep agreement is required, with no exceptions.  This contract between a buyer and broker or broker agent outlines the agent’s compensation and duties to the buyer client. If a seller or listing broker is not offering compensation, the buyer will be responsible for paying their agent’s compensation.

 

SELLERS: YOU MAY STILL PAY THE BUYER AGENT COMPENSATION!

This has not changed.  The listing agent or seller may still offer compensation to the buyer’s agent, but there are now limitations on how that may be communicated and marketed. We can no longer communicate via the MLS. If there is an offer of compensation to a buyer broker from a seller or listing broker the seller must approve the specific amount or rate of payment in writing. You need to discuss with your agent the pros and cons of offering or not offering a buyer’s agent compensation.  

 

FURTHER THOUGHTS:

~ Sellers can still offer, and buyers can accept concessions such as offers to pay the buyer’s closing costs.

~ Current regulations do not allow agent compensation payments to be financed as part of a mortgage.