04/15/2024
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 wonât be allowed to offer a commission to buyersâ agents in the MLS listing. That doesnât mean a seller or a sellerâs agent canât pay buyersâ agents a commission; it just canât 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 agentsâ duties to the consumer. It doesnât mean the compensation has to be paid out of the buyersâ 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 doesnât mean that you canât offer a commission to buyersâ agents.
⢠It will likely still benefit sellers to offer commissions to buyersâ agents to get the most exposure for their home and the best offers possible.
⢠A buyerâs agent will take half the work or more off the sellerâs agentâs plate. If the sellerâs agent must do the work of two agents, they might charge more.
⢠Thereâs a good chance that buyer agent commissions will still be paid through the proceeds of the sale.
⢠If youâre selling to a buyer who doesnât have an agent representing them, theyâll 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 buyersâ agents will ensure your interests are protected. Years ago, buyers didnât have an agent representing their interests and were often unaware that the sellerâs agent represented the sellerâs interest and not the buyerâs.
⢠You will now have to sign an agreement with a buyerâs agent before viewing homes.
⢠A buyerâs 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.
⢠Donât expect sellers to drop their price if they arenât paying a buyerâs 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 isnât as easy as it may sound.
The best thing to do if youâre curious or concerned about the coming changes is to reach out to me. Iâm always happy to answer questions!
