There’s More Clarity on Commissions, But Realtors Still Offer Value

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• The rules of the final NAR agreement went into effect in August. We spoke to real estate professionals to see what’s changed.
• Buyers can still benefit from working with a real estate agent, and in many cases the seller can still cover the costs.
• Sellers can always negotiate with both their agent and the buyer about how much they will pay.

Earlier this year, the National Association of Realtors reached a $418 million settlement. Major changes in the way we buy and sell homes.

These changes went into effect on August 17, 2024. Before the settlement rules were implemented, it was unclear exactly what impact this would have on the home-buying process. Will buyers stop using it? real estate agents To buy a house? Will first time home buyers Will they be left out of the process because they have less cash to bring to the transaction?

Two months later, we spoke with real estate professionals from around the country to see how the home buying process has improved after the NAR solution.

How has the home buying process changed after the NAR agreement?

Here’s a quick summary of what’s changed:

• Home buyers now need to sign a contractWorking with a real estate agent is sometimes referred to as a buyer-broker agreement.
• If a seller offers to compensate the buyer’s agent, this information may not be posted on the MLS, the database that real estate professionals in a particular market use to find and list properties for sale. Sellers can still offer concessions on the MLS that allow the seller to pay off a portion of the buyer’s debt. closing costs or other costs associated with obtaining a mortgage and purchasing a home.

In some markets, not much has changed

What did these changes look like in practice? Depending on the norm in your market, you may not notice much of a difference.

traditionally Those who paid were the sellers both the agent’s commission and the buyer agent’s commission. Many predicted that the NAR deal would see fewer sellers offering commissions and require buyers to pay their agents out of their own pockets. However, in many areas this has not been the case.

“I’ve yet to come across an ad that doesn’t offer at least some compensation,” he says Blake BlahutBroker partner at Realty ONE Group Inspiration in Orlando.

Other real estate professionals we spoke to confirmed this.

“This definitely creates confusion for buyers because many think they have to pay the buyer’s broker, which is simply not true,” he says Jennifer Ohovat, A real estate agent with Compass in Los Angeles. In the Okhovat market, sellers often still pay the buyer’s agent’s commission.

Sellers may still pay commission but are more negotiable

Commissions have always been negotiable, but this is not always clear to buyers and sellers. There may now be more back-and-forth between seller and buyer as they figure out who will pay what.

For example, a seller may be willing to pay the buyer’s agent’s commission but may try to negotiate it down.

If you want to buy a home but the seller doesn’t want to pay your agent’s commission, you’ll have to pay it yourself or find a different home. Mortgage lenders It doesn’t allow you to fund agency commissions, so you pay that cost out of pocket.

Buyers need to sign an agreement with their agent

As a buyer, you must sign a buyer-broker agreement before your agent will do any work for you or show you any home. This agreement will outline how much your agent will be paid for their services.

“It summarizes how compensation works,” says Blahut.

This is usually a percentage of the price of the home you purchase, but it can also be a specific dollar amount or an hourly rate. You can negotiate this amount before signing.

What home buyers and sellers need to know after a NAR post-deal

Working with a buyer’s agent is often worth it

Having a buyer’s agent can still be extremely valuable.

“Where agencies often add value is in their networks, their knowledge, their resources and their ability to go above and beyond,” he says Danielle AndrewsShe is a real estate broker with Realty ONE Group Next Generation in Tallahassee, Florida.

Agents can give you helpful information about a home or help you identify problems that could turn into costly repairs down the road. And more importantly, they work for You.

Dottie HermanA seller’s agent (often called the listing agent) has a duty to do what’s best for his client, the seller, says the vice president of Douglas Elliman Real Estate in New York City. So if you make an offer to them, they won’t tell you if the home is overpriced or if the seller is willing to accept less than the asking price. A representative representing you will explain these to you.

“If I were a buyer, I would want to be represented,” Herman says.

But make sure you find an agent who will add value to the transaction

there is one lots of real estate agents there and not all of them are excellent at what they do.

Ask friends or family for recommendations and talk to a few different agents to get a feel for who you work well with. Blahut says to interview potential agents as if you were hiring someone.

Understand what you may owe when you sign a buyer-broker agreement

Andrews says buyers should ask many questions before signing with an agent. Find out how long the contract is valid, what happens if you want to back out, and whether you’ll owe a bond or other fee in addition to the agent’s commission.

As a seller, offering compensation may still be a wise move

As a seller, not paying a buyer’s agent’s commission can help you save money. However, it may make it difficult for you to attract buyers.

When deciding whether to offer compensation to your buyer’s agent, talk to your agent about what makes sense in your local market.

“It is important that agents provide an accurate market expectation,” says Andrews. If buying demand has slowed in your area and there aren’t as many buyers looking for homes, “you may not want to add the additional hurdle of having to negotiate a commission.”