New Real Estate Commission Rules

The outcome of a recent lawsuit involving The National Association of Realtors® will go into effect starting on August 17, 2024. The lawsuit was regarding transparency around real estate agent’s commissions. As a general summary, the laws regarding real estate commissions have not changed, but the way in which commissions are communicated and negotiated has been revised. 

The Multiple Listing Services (MLS) will remove a data field that previously included an offer of compensation to a Buyer’s agent. Offers of compensation will potentially continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. 

This puts more weight on your need to have a trusted relationship with your real estate professional to guide you through this new landscape.

Industry professional and owner of Home4Good®, Brooke Miller comments, “The seller is better served by sticking to a ‘yes’ or ‘no.’ Yes, they will entertain concession requests, or no [the buyer has to pay their own agent.]. And, they can discuss that with their agent.”

Historically agents have been able to pre-negotiate a commission rate, national averages indicate about 2-3% paid by the Seller to the Buyer’s agent. Concessions were included in the MLS, which could include commissions and/or closing costs. Now, the data field will be removed from the MLS, and any offer of compensation to pay a Buyer’s agent’s commission will have to be negotiated directly between the parties. 

Sensational headlines have been streaming across news sources for several months, but the biggest challenge now is confusion. What do these changes actually mean to the real estate professional and to the buyer and seller? [Read more…]

Perhaps, the most visible change is that agents working with a buyer must now enter into a written buyer agreement before touring a home. This agreement commits the buyer to paying the agent’s fee if they purchase the home. The buyer can negotiate with the seller the payment of the buyer’s agent’s commissions when they submit an offer, but that will now need to be negotiated. 

This added burden on the buyer could have a chilling effect on the market for a time, as consumers adjust to these new rules. The rules may challenge the value of the agent’s role. Ideally, it is the trained real estate professional who can help their client (buyer or seller) strategize the custom approach that is needed for them to achieve their best outcome.  

Simone Knepper with Coldwell Banker in Lake Arrowhead, CA comments, “It’s more than just opening a door. [The agent] is a guide to help the buyer through the home-buying process. What we do has not changed. It’s how we go about negotiating our commissions that has changed.”

For more insight into these commission rule changes, tune in to Building Wealthy Habits, Episode 32 on August 20, from wherever you get your podcasts. 

*Adapted from an interview with real estate professionals, Brooke Miller and Simone Knepper, on Building Wealthy Habits. Tune in to watch the full episode here (https://www.youtube.com/playlist?list=PLLYCt_-AfoO5B37PJlg1xWNc5JIRrUQE6) on August 20.