Hawthorne, NY
By Ralph Ragetté Jr
The National Association of REALTORS® (NAR) just made a significant move, settling lawsuits over real estate commissions by agreeing to pay $418 million and rolling out changes across the Multiple Listing Services (MLS) nationwide. While they’re not admitting to any wrongdoing, these changes will impact how both buyers and sellers approach the market.
Here’s what you need to know:
No More MLS-Listed Commissions for Buyers
Sellers can no longer offer compensation to buyer brokers directly through the Multiple Listing Services (MLS). They still have the option to offer compensation as part of their overall marketing strategy, but it can’t be baked into the MLS listing. This means sellers will need to be more strategic about how they make their listings attractive to buyers.
Buyers Must Sign a Representation Agreement
If you’re a buyer, don’t expect to start touring homes without first signing a Buyer Representation Agreement. This agreement spells out the terms of your relationship with your agent, including what services they’ll provide, how much those services will cost, and what kind of value you’ll get from them. It’s a step toward more transparency, ensuring you know exactly what you’re getting into.
Broker Compensation: It’s a New Ball Game
One of the big shifts is in how broker compensation works. From here on out, buyers are on the hook for paying their own broker’s commission, while sellers take care of theirs. This change puts the negotiation squarely in the buyer’s lap, so make sure you’re having those conversations upfront. You’ve got three options: pay your broker directly, ask the seller to cover it, or request a closing concession.
What If You Can’t Afford Your Broker?
Don’t worry—you’ve got options:
- Pay them directly: This is the straightforward route, where you handle the payment yourself.
- Ask the seller to pitch in: See if the seller is willing to cover your broker’s commission.
- Negotiate a concession: You can also ask for a concession at closing to help with the cost.
Will Seller Commission Rates Drop?
Maybe. Some sellers will keep offering the same commission rates to attract buyer brokers, but others might take a different approach. Instead of setting a fixed commission, they might choose to evaluate it along with other terms in the purchase offer. This could lead to savings but will also make the negotiation process even more critical.
What About Home Prices?
Despite these changes, home values aren’t likely to take a hit from shifting commission structures. Prices are still driven by market factors like supply and demand, location, and the overall economy. So, don’t expect to see a direct correlation between commission adjustments and home price trends.
Picking the Right Agent Is More Important Than Ever
With these new rules in play, the agent you choose matters more than ever. Focus on finding someone with experience, local expertise, and a solid track record. Communication and trust are key—your agent should get what you’re looking for and know how to get you there. And with commissions now up for negotiation, you’ll want an agent who can really fight for your interests.
Ralph Ragetté’s Take
This isn’t just a shake-up; it’s a whole new way of doing business in real estate. The new Buyer Representation Agreements mean that you’ll have a clear understanding of your relationship with your broker, including what you’ll need to pay. But remember, financing a commission through your mortgage isn’t practical—it’s seen as a personal loan, which brings higher interest rates and tougher mortgage qualifications. Most buyers will likely ask the seller to cover the commission or negotiate a concession at closing.
Who you work with can make or break your deal, especially now. Make sure you’re aligning yourself with an agent who has the skills and know-how to navigate these changes and secure the best outcome for you.
Ralph Ragetté Jr has made a name for himself as one of Westchester County’s most innovative and top-producing agents since joining his family’s real estate firm in 2003.
Website: www.Ragette.com
The Ragetté Report | Weekly Real Estate News
