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If you’re a home buyer or seller, you should know about some significant changes in the real estate market: Following a settlement with the National Association of Realtors (NAR) — effective August 17, 2024 — the changes involve agents’ commissions and client agreements.
The first and most important change is that buyers must sign a Buyer Agency Agreement before viewing properties with an agent. This agreement defines the terms and conditions of working with the agent and the agent's commission. Before, signing such an agreement was not required in every state.
In the past, sellers paid an average 6% commission split between their agent and the buyer's. With the new law, Multiple Listing Services (MLS) can't advertise commissions anymore, meaning buyers and their agents must negotiate fees directly.
Impact on Buyers and Sellers
With the new rules, buyers may have to pay their agent's commission, which sellers covered before. This change means buyers should discuss and agree on commission fees with their agents upfront. To save on costs, some buyers may buy homes directly from sellers or use real estate attorneys instead of realtors to avoid high commission costs.
Sellers may save money by not paying the buyer's agent commission anymore. However, if sellers don't offer to cover any commission, they may get lower offers from buyers or have fewer agents showing their homes. Some sellers may choose to sell their homes on their own, using online platforms to avoid paying agent fees
Negotiating Tips
Mike Fiffick, a LegalShield provider lawyer, has shared the following negotiating tips.
For buyers:
- Interview multiple agents: Since you may now pay commissions, choose an agent who offers the best service and value. Look for agents with solid reviews and effective communication.
- Negotiate commission terms: Before viewing properties, set up a clear and explicit agreement on commission rates with the agent. Ensure the agreement follows flexibility to exit if the service is unsatisfactory.
- Target specific listings: Focus on homes where sellers offer to cover all or part of the buyer's agent fees.
For sellers:
- Strategize commission offers: Decide if and how much of the buyer's agent fee to cover. While reducing this fee can save money, it may also reduce the pool of potential buyers.
- Consider for-sale-by-owner: Selling without an agent using online platforms could be a cost-effective option. Ensure you have the necessary legal support to manage the transaction effectively.
These significant changes require buyers and sellers to be more proactive and informed about commission structures and their impacts on home transactions. If you are enrolled in LegalShield, you can work with an experienced provider lawyer to navigate this shift in the real estate industry! If you still need to enroll, please consider doing so at your next opportunity.
Your LegalShield Provider Law Firm can help you with your real estate transaction. If you still need to become a LegalShield member, consider enrolling at your earliest convenience.