Changes in How Real Estate Agents Work With Buyers

As a potential home buyer or seller, staying informed about changes in the real estate landscape is crucial. With recent developments in the industry pertaining to fee structures and disclosures, and lots of chatter and misinformation surrounding the pending changes in commission offerings via REALTOR® networks, it’s natural to have questions and concerns. 

Addressing Public Concerns

One common concern that has surfaced relates to recent real estate lawsuits and their potential impact on the industry pertaining to commission offerings and the way in which real estate agents negotiate payments with their clients and the buyers and sellers of real estate. These changes will impact everyone involved in real estate. For consumers (such as buyers fearful of increased cost of homeownership), to sellers strategizing how best to adjust, to real estate professionals concerned about new regulation and new conversations with their clients — it’s essential to address these concerns with accurate information and clarity. The proposed settlement by the National Association of Realtors aims to enhance transparency within real estate transactions. Here’s what you need to know:

1. Increased Transparency: Details of commissions will be openly available, promoting transparency throughout the buying and selling process.
2. Value Communication: Emphasizing the importance of articulating our value as real estate professionals ensures clients understand the benefits we bring to the table.
3. Regulatory Changes: While buyer’s agent compensation may not be listed on MLS, sellers can still offer it to maintain a competitive edge.

These adjustments are designed to refine how agents, buyers, and sellers interact, ultimately leading to smoother transactions. At Falkner Cohen Group, we see these changes as a positive step towards greater clarity and professionalism in the industry.

New Requirements for Buyer Representation Agreements

Beginning mid-July 2024, the terms of the NAR Settlement will introduce new requirements for agents representing buyers. These changes are designed to enhance transparency and ensure clear communication between agents and their clients.

Moving forward, agents must enter into a written agreement with buyers before they tour any home. This agreement must include specific conditions regarding compensation:

1. Disclosure of Compensation: The written agreement must conspicuously disclose the amount or rate of compensation to be received by the agent, regardless of the source or how this amount will be determined.
2. Objectively Ascertainable Compensation: The amount of compensation cannot be open-ended but must be objectively ascertainable. This means that it cannot be stated as “whatever amount the seller is offering to the buyer.”
3. Limitation on Compensation: Agents cannot be compensated more than the amount stated in the buyer representation agreement, regardless of the source. For instance, if the seller or listing agent offers additional payment, the additional commission cannot exceed the amount agreed upon in the buyer representation agreement.

In addition, our Buyer Broker Compensation documents commit buyers and agents to working exclusively together for a designated duration of time.  

These new requirements aim to ensure clarity and fairness in real estate transactions, benefiting both buyers and their agents. 

Responding to Questions about Commissions

Another question that arises pertains to changes in commission structures, particularly regarding the buyer’s side commission. Here’s what you need to know:

1. Commission Flexibility: Commissions have always been negotiable, and while the proposal to remove buyer’s agent compensation from MLS visibility may lead some to think they can save on commissions, it’s essential to consider the broader implications.
2. Market Positioning: Offering a commission can attract more buyers through their agents, potentially leading to better offers.
3. Professional Handling: Transactions involving real estate agents typically handle complexities like inspections and legal paperwork more smoothly, which can be invaluable.

Ultimately, the decision on how to proceed is yours. At Falkner Cohen Group, we’re here to provide you with all the information you need to make informed choices tailored to your unique circumstances. Our expertise and dedication ensure that you receive the best possible representation throughout the buying or selling process.