The National Association of Realtors (NAR) recently agreed to a major shift in policy that changes its rules about how buyers’ agents are paid.
The move was in response to numerous class action lawsuits that said that the trade group was essentially unfairly setting agent commissions in a way that burdened homeowners and inflated housing prices.
The old rules for sellers and buyers go out the window
Under the old rules, the real estate agent who represented a property’s seller would charge about 6% of a home’s sale as a commission price but offer to split that compensation with any agent who brings in a buyer. This put the burden of paying both agents squarely on the property’s seller – and critics say that sellers, in turn, often raised their prices to make the commission less financially painful.
Under the new rules, sellers’ agents who use NAR databases to list homes can no longer use those listings to offer to compensate a buyer’s agent via split commissions. This ends any incentive for buyers’ agents to selectively guide their clients to properties for their own gain and puts the burden on buyers to negotiate (and pay for) their own agents’ services.
For sellers, the move could mean thousands of dollars in savings – or the difference between 3% and 6% of the sales price of their home. However, the financial burden on buyers – who now have to come up with extra cash during an already financially stressful situation – could limit some buyers and cause others to make lower offers.
Ultimately, nothing in the new rules prevents buyers and sellers from making private agreements about split commissions and shared costs associated with the sale of real estate. However, it is wise to make certain that you are legally protected in all your real estate agreements with the help of an experienced real estate attorney.
