The Big Picture: Changes in Real Estate Standards

Starting August 17th, listing and selling real estate will undergo significant changes. The reason behind these changes is straightforward: the National Association of Realtors (NAR) has settled a class action lawsuit, leading to a new approach to paying commissions for real estate services nationwide.

Traditionally, real estate commissions have always been negotiable. However, the new rules will introduce an “unbundled” payment structure. Let’s break down what this means for both sellers and buyers:

When a seller signs a Residential Listing Agreement, it will now specify only the amount the seller will pay their broker. Additionally, the Agreement will have a new section where the seller permits the broker to offer concessions to the buyer. This change aims to make the cost of selling a home more transparent and gives sellers more control over their expenses. (The local Multiple Listing Service will no longer advertise an amount that the seller is willing to pay the buyer broker)

Buyers will also see changes. When buyers start looking at homes, they will sign a Buyer Representation and Broker Compensation Agreement. This agreement will detail the amount the buyer agrees to pay their broker upon the successful close of escrow.

When a buyer makes an offer on a property during the negotiation process, they can ask the seller to cover their obligation to their broker. Alternatively, the buyer can choose to pay it themselves. This new point of negotiation provides more flexibility and clarity in the transaction process.

While these changes are designed to make the process of buying and selling homes more transparent and give buyers and sellers more control over their financial obligations, initially, they sound very confusing. If you’d like to learn more, please call me at 818-884-1500. We can talk about these changes now so you are ready to buy or sell when the time is right.

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