What the NAR Settlement Means for Homebuyers: Key Changes in Real Estate You Need to Know
Buying a home is one of the most significant financial decisions you'll ever make. Having a trusted real estate agent, especially one who is a REALTOR®, can make all the difference in navigating this complex journey. With the recent settlement by the National Association of Realtors (NAR), there are several important changes that homebuyers need to be aware of. These changes are designed to offer more transparency and protection for you, the buyer. Let’s break down what this settlement means for your homebuying experience.
Key Changes That Benefit Homebuyers
1. You’ll Sign a Written Agreement Before Touring Homes Before you start touring homes, you’ll need to sign a written agreement with your agent. This agreement is crucial as it outlines the terms you’ve negotiated with your agent, detailing the services they will provide and the compensation they will receive. Make sure you understand every aspect of this agreement before signing, so there are no surprises down the road.
2. Specific Compensation Terms Must Be Included The agreement with your agent will now require clear and specific terms regarding their compensation. Here’s what it must include:
Disclosure of Compensation: The exact amount or rate of compensation your agent will receive, or how this amount will be calculated, must be clearly stated.
Objective Compensation: The compensation must be objective and specific, such as a flat fee, percentage, or hourly rate. It cannot be vague or open-ended, like “whatever the seller is offering.”
No Extra Compensation: The agreement must clearly state that your agent cannot receive any additional compensation beyond what has been agreed upon in the contract.
Commissions Are Negotiable: A clear statement must be included, emphasizing that all broker fees and commissions are fully negotiable and not set by law.
3. Written Agreements Apply to All Types of Tours Whether you’re touring homes in person or through a live virtual tour, this written agreement is necessary. However, you do not need a written agreement just to speak with an agent at an open house or to ask about their services.
4. Seller-Provided Compensation While the seller may still offer compensation to your agent, this information will no longer be shared on a Multiple Listing Service (MLS). MLSs are local platforms where brokers share property listings, but compensation details will now remain private. You can still negotiate other concessions, such as having the seller cover your closing costs.
These changes will officially take effect on August 17, 2024.
What the Settlement Doesn’t Change
1. REALTORS® Are Still Your Trusted Guides Despite these changes, REALTORS® are still committed to guiding you through the homebuying process with your best interests at heart. They are ethically obligated to adhere to the REALTOR® Code of Ethics, ensuring transparency and fairness in all transactions.
2. Compensation Is Still Negotiable The ability to negotiate your agent’s compensation remains unchanged. It’s important to have clear and open discussions about compensation when choosing an agent. Make sure you fully understand what services you’re getting and what you’ll be paying for them.
3. You Have Options As a homebuyer, you have a wide range of choices. Work closely with your agent to explore all your options, helping you make the most informed decisions that best meet your needs.
These updates aim to enhance transparency and protect homebuyers during the purchasing process. By staying informed about these changes, you’ll be better equipped to navigate the homebuying journey with confidence.
Ready to make your move? Contact Lisa M. Lum (DRE #02005150) at Coldwell Banker Realty to guide you through every step of your homebuying journey. Reach out today to get started!