JACKSONVILLE, Fla. – Real estate agents across the country are bracing for big changes to how they do business.
Starting Saturday, new rules will impact the way real estate agents get paid by homebuyers and sellers. The changes are part of a $418 million settlement from the National Association of Realtors.
The standard 5 or 6% commission was the focus of that settlement deal after a series of lawsuits alleged the standard practice violated anti-trust laws.
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The first change prohibits agents’ compensation from being included in multiple listing services. The second change requires buyers’ agents to discuss their compensation upfront.
The settlement changes could lead to lower home-buying costs by giving consumers more negotiating power.
Melissa Ricks, a local real estate agent with a decade of experience, told News4JAX that her team with the Melissa Ricks Experience has already begun to implement the changes.
“It’s an opportunity for [Realtors] to show our value and to show our level of knowledge and our expertise, which I think is an awesome, an awesome factor with this whole thing,” Ricks said. ”So, I’m choosing to take the glass-half-full mindset with it.”
Ricks said the changes should not scare homebuyers and sellers. The National Association of Realtors (NAR) is just demanding more conversations between agents and their clients.
“My listing appointments, when I would meet with a seller and decide whether we were going to work together, typically take 45 minutes to 60 minutes. Those are now taking two hours, because those conversations are a lot more in-depth and detailed and education-based,” Ricks said.
The changes going into effect Aug. 17 mean real estate agents who use and list properties for sale on a Multiple Listing Service (MLS) — will now have to enter into written agreements with buyers before touring a home.
The NAR said those written agreements must include:
- A specific disclosure of the rate of compensation the real estate agent will receive
- Compensation that is objective and not open-ended (e.g., $0, X flat fee, X percent, X hourly rate)
- A term that prohibits the agent from receiving compensation that exceeds the amount or rate agreed to in the agreement with the buyer
- A statement that broker fees and commissions are fully negotiable and not set by law
“It is it has never been more important for you to have an educated agent that you trust and as a buyer, big time, you need to have a consult. You need to sit down. You need to understand all of the different caveats and the different scenarios that can come into play, and you need to trust that that person is educating you on every single possibility,” Ricks said.
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Agent compensation for home buyers and sellers continues to be fully negotiable. The big question consumers should be asking is “How much is this going to cost me?”
Buyers were typically represented for free in the past because agent commissions came from the home seller’s pocket. The new agreement is designed to inform buyers that they are on the hook to pay their own real estate agent. However, some sellers could still choose to cover both commissions.
“Just know that this is a way for real estate transactions to be done in a little bit more of a transparent manner, and that’s a good thing,” Ricks said. “This is a positive change. But the reality is, nobody likes change.”
Written agreements are required for both in-person and live virtual home tours. You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
When finding an agent to work with, the NAR recommends asking questions about their services, compensation, and these written agreements.