FAQs
Why were 2024 rule changes required by Realtors?
Shifts in Commission Responsibility: Traditionally, sellers paid both the listing agent and the buyer’s agent’s commission, typically ranging from 5-6% of the home’s sale price. Following the settlement, sellers are no longer required to cover buyer’s agent commissions. Instead, buyers must negotiate and directly pay their agents’ fees, though some options, such as seller concessions, may still help offset these costs
The intent behind the NAR settlement’s rule prohibiting the communication of buyer agent compensation in Multiple Listing Services (MLS) is to promote transparency and fairness in real estate transactions by shifting the responsibility for negotiating commission to buyers and their agents. Here are the key reasons:
- Empowering Buyers in Negotiations: By removing compensation offers from MLS listings, the rule encourages buyers to engage directly with their agents about fees and compensation, making them more active participants in negotiating agent commissions
- Increasing Transparency: The prior practice of sellers pre-determining buyer agent commissions and listing them in the MLS was viewed as limiting the transparency for buyers, who may not have been fully aware of the commission structure or had little influence over the amount. The settlement aims to clarify that agent fees are negotiable
- Mitigating Potential Conflicts of Interest: By requiring commissions to be handled outside the MLS, the settlement seeks to reduce potential conflicts of interest where a buyer’s agent may prioritize properties offering higher commissions, thereby ensuring agents act in their clients’ best interests
In summary, the rule seeks to create a more balanced and transparent market where buyers and sellers can negotiate compensation terms more openly and directly.
What is a summary of the recent settlement rule changes?
1- No compensation allowed to be communicated as part of the MLS.
Real estate agents can no longer list offers of compensation for buyer agents on Multiple Listing Services (MLS). This prevents sellers from predetermining these costs, further emphasizing the buyer-agent negotiation process
2- Buyer Agents must have a signed representation agreement in place with their buyer stating their services and fee’s. The buyer is ultimately responsible for compensating their buyer agent, not a home owner selling their home.
Transparency in Buyer-Agent Agreements: Buyers must now sign written agency agreements with their agents before touring homes. This agreement outlines the agent’s compensation, ensuring clearer expectations and cost transparency throughout the home-buying process
Which buyer option is best for me?
Choose the flat rate pricing model if you would like complete coverage and representation from start to finish.
Choose the bid direct on Equity Saver USA listings if you are unrepresented by a buyer agent and want to communicate your offer to the seller.
Choose the Advanced bid direct option if you are an experienced buyer and you have viewed the property and know what you want to offer and don’t need much, if any, service from a Realtor.
What does a typical sales transaction look like?
What is the difference between a buyer agent and buyer broker?
A broker has a higher level of experience and expertise. An agent does not have the same level of education and experience and must work under the supervision of a Broker.
Were Realtor commissions always negotiable?
Why is communicating a seller contribution amount to a buyer agent a mistake?
- The question really should be what does your buyer agent agreement call for in terms of payment from the buyer to the buyer agent?
- A buyer agent can only collect the amount agreed upon in the buyer agency agreement signed by the buyer. Any excess collected/offered from the seller will be used to the benefit of the buyer. If a seller communicates willingness to pay more than what is outlined in the buyer agent contract. Ex: A buyer contract states it will pay 2% of the sale price to the buyer agent. If a seller/listing agent communicates upfront that the seller is offering 3%…they just exposed themselves to pay more than necessary.
- Poor negotiating stance. Sales 101 teaches that a seller never lead by offering discounts and incentives BEFORE receiving an offer.
Will buyers tour my home?
How to counter a buyer agent request for seller compensation (ransom request)?
State that any request for seller contribution to a buyer agent commission will be consider as part of the complete offer submitted by the buyer for seller consideration. This allows for the buyer agent’s compensation to be exposed and visible to all parties to view and negotiate.
Example counter offer response: Counter the buyer’s offer with the sale price adjusted UP to cover the buyer agent’s compensation request. Adjust price up by increments 100%, 50% and 25% and let the buyer and buyer agent decide which to select. At the end of the day, the buyer signed a contract stating they are responsible to pay the buyer agent, not the seller. The buyer and buyer agent need to work through what is fair and justified in terms of compensation. Sellers can also simply refuse to pay any buyer agent compensation requests.
How long have you been operating in Charlottesville?
MLS# 616215
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We saved this seller $7,700.00!
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We saved this seller $8,740.00!
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MLS# 690856
$680,000
We saved this seller $9,000.00!
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