In mid-August, changes took effect in the residential real estate market that likely will transform the way homes are sold, as well as how much agents are paid and who pays them.
The National Association of Realtors® in March announced a $418 million settlement that ended litigation begun in 2019 of claims brought on behalf of home sellers related to broker commissions and altered some of the rules of buying and selling.
CNN reports that “Realtors across the country have been preparing for the change, attending trainings and poring over the details of the new contracts they must sign with prospective homebuyers.”
I’m one of those Realtors. I won’t bore you with you everything I’ve learned, but there are two big changes that buyers and sellers entering the market in the wake of the settlement need to know:
1. A Realtor can no longer open the door of any home for sale to any buyer until they have a written buyer agreement. This legally binding contract provides protection and transparency for both of us, allowing you and me to know what we can expect from each other. In short, it’s an additional step to take early in the process of working together. But it also protects the rights — and spells out the obligations — of both of us.
2. Agent compensation (in the form of commissions) can no longer be included in multiple listing services (MLS). That information can be detailed elsewhere or communicated in person, but it cannot be made public in MLS entries. As the NAR notes, the association does not set commissions, and commissions were negotiable long before this settlement. Previously — and cited in claims that led to the NAR settlement — listing the commission percentage for the buyer agent publicly violated antitrust laws by harming competition and leading to higher prices. This rule, similar to the new buyer agreement requirement, is intended to make commissions more transparent and competitive and could possibly drive commissions down.
These are significant changes that have sometimes been misrepresented in the media. I get it; this is complicated and behind-the-scenes stuff that now must be top-of-mind for buyers and sellers — and it’s not easily dissected and applied from state to state. Already, I’ve encountered other agents in Wisconsin who clearly are not familiar with how the new commission rules work, which makes the process of buying and selling a home more challenging for all of us.
My advice: Ask any real estate professional you’re considering working with what they have done to educate and prepare themselves in the wake of the new NAR-related changes — and how they can help you navigate this critical industry transition.
As always, I’m here to help.
