The biggest changes in decades to the way real-estate agents get paid are being rolled out around the country. The National Association of Realtors, or NAR, reached a landmark legal settlement earlier this year over commissions, and by Aug. 17 most of its roughly 1.5 million members will be subject to the new rules. Here is what home buyers and sellers need to know.
How did the system work prior to August 17, 2024?
Sellers agreed to pay their agents a certain amount— commission-based brokers charged around 6% of the sale price —the seller’s agent received around 3.3% and paid 2.7% to the buyer agent. Home Avenue clients avoided the 3.3% commission and paid a low flat listing fee of around $4000 plus around 2.7% to the buyer agent. When a home was listed on the MLS, the listing showed the amount of compensation the buyer agent would receive.
What changed after August 17, 2024?
Sellers are no longer required to pay a buyer agent commission or fee. Listings in the MLS will no longer show any offer of compensation paid to a buyer broker. In most cases, the buyer will request, at the time of an offer, that the seller provide a credit to cover the cost of their buyer agent fee. All commissions/fees are negotiable by law and sellers can decide if they want to provide a credit to the buyer. Second, buyers will be required to sign agreements specifying how much their agents will be paid. Buyers will do this before they start touring homes with agents. This means that buyers will negotiate directly with their agents, instead of letting the seller decide how much the buyer’s representative earns.