by Laura Dandoy | Special to the Courier

The recent settlement between the National Association of Realtors and plaintiffs in a class-action lawsuit introduces significant changes to the real estate industry. These changes, set to take effect on August 17, 2024, bring both new requirements and new opportunities for buyers and sellers. Here are some of the things you need to know to successfully navigate this new landscape.

New buyer agent agreement requirement

One of the most significant changes is the mandatory requirement for a separate written agreement between buyers and their agents. This agreement must be established before viewing properties and clearly outline the terms of the buyer’s agent’s commission. The agreement will specify whether the commission is a flat fee or a percentage of the purchase price and offer an exclusive or non-exclusive representation option with your buyer’s agent.

This new requirement ensures buyers understand the compensation structure for their agents. It fosters transparency and clarity as the transaction evolves, helping prevent misunderstandings.

Seller’s role in agent compensation

Under the new settlement, sellers will continue to agree to pay their own representative, the listing agent. This arrangement maintains the existing practice of sellers paying their agent’s fees directly at the close of escrow.

The settlement removed the automatic sharing of commissions between listing and buyer agents that had been previously offered through the Multiple Listing Service. This does not necessarily increase the cost burden on buyers. Buyers can negotiate with sellers to pay their agent’s fees through closing cost concessions. This mechanism allows the transaction’s overall cost to remain relatively unchanged for the seller.

Benefits of representation for buyers and sellers

Despite these changes, many still believe professional representation for both buyers and sellers is vitally important. Real estate transactions can be complex and often involve numerous legal, financial, and logistical considerations. The benefits of an experienced real estate broker include strategic advice, market insights, and assistance in negotiations.

Agents advocate for the interests of buyers and sellers alike, helping both secure favorable terms and conditions. Listing agents are responsible for helping sellers establish a list price, marketing, negotiating offers, and managing myriad details to achieve a successful close of escrow. Professional representation on both sides of the transaction can help to ensure each has clarity and confidence throughout the process.

Conclusion

The NAR settlement affirmed the long held truth that all real estate commissions are negotiable while also bringing new requirements and opportunities that reshape the real estate transaction landscape. The mandatory written agreement between buyers and their agents clarifies compensation structures and reinforces transparency. At the same time, the potential for buyers to negotiate concessions from sellers offers flexibility in managing transaction costs.

Laura Dandoy is a broker-partner at The Real Estate Resource Group, a Luxury Brokerage, in Claremont.