As of August 17, 2024, significant changes in the residential real estate industry have taken effect due to the National Association of REALTORS (NAR) settlement agreed upon earlier this year. The settlement primarily impacts how real estate commissions can be communicated and shared between agents, REALTORS, and brokerages.
The Multiple Listing Service (MLS) had been the traditional route for transmitting agent compensation for many decades, but this is no longer permitted under the new rules. For more information regarding the settlement and the reasons behing the lawsuit against NAR, refer to the following article: Understanding the NAR Settlement: A General Overview
Key Changes Every Buyer and Seller Needs to Know:
No More Commission Communication via MLS:
One of the most notable changes is that REALTOR commissions can under no circumstances be communicated through the MLS. This includes not only current and new listings but also historical compensation data. MLSs, which typically keep records for 10 to 15 years - or even longer, depending on the local board of REALTORS - have wiped all commission information from their systems. The NAR Settlement marks a significant shift in how broker commissions are handled in the real estate industry.
Seller Options for Commission Offers:
Sellers still have the option to offer a buyer’s agent commission upfront, especially as an incentive when the property has known issues, is not in a prime location, needs to sell quickly, requires some TLC, or for a variety of other reasons. This approach can be particularly useful in attracting buyer interest during challenging market conditions. More detailed information on how the settlement affects sellers of real estate can be found here Understanding the NAR Settlement: Implications for Sellers of Real Property.
Commissions as Part of the Offer:
Moving forward under the new regulations, commissions can now be included as part of the offer. A strong offer might entice a seller to offer a substantial commission to the buyer’s agent, while weaker offers might not persuade a seller to offer much or any commission at all. This change places more responsibility on buyers, who may need to secure additional funds to cover their agent’s commission as part of the purchase. For more information on how the settlement specifically impacts buyers of real property can be found here Understanding the NAR Settlement: A Buyer's Perspective.
Communication of Commissions:
While commissions are no longer listed on the MLS, they can still be published on a brokerage’s website for their own listings, and can also be communicated through fliers, emails, and other marketing materials. This allows real estate agents to still offer commission incentives on their listings, albeit through different channels than before.
Buyers Must Sign an Agreement with an Agent:
Starting now, buyers are required to sign an agreement with a REALTOR before touring any homes or starting negotiations on any property they are interested in purchasing. This new requirement ensures that both parties are clear on the terms of representation from the very outset. The specific form to be used depends on the circumstances, such as whether it is intended for a single showing or if the parties intend to establish a brokerage relationship for representation, etc. The agent’s broker will generally set the guidelines on which forms should be used within the scope of the new regulations.
The Importance of a Skilled Agent:
In this new landscape, having an experienced and skilled agent is more important than ever. Whether representing a buyer or seller, an agent’s ability to negotiate the best deal for his or her client is crucial. It’s essential to choose an agent who is worth the money and committed to representing your interests fully throughout the entire transaction.
Restrictions include Incentives and Bonuses to Agents
Additionally, no incentives, including bonuses or other financial perks, can be offered to real estate agents via the MLS. This means that any form of compensation, whether standard commission or additional incentives, must now be communicated and arranged outside of the MLS system.
Seller Incentives to Buyers May Still Be Permissible
It’s important to note that seller incentives directly to buyers, such as offering $5,000 toward buyer closing costs, may still be permissible, Brokers should check with their local board for any MLS restrictions. These incentives can be a valuable tool in helping to attract potential buyers.
Adapting to the New Rules: How We’re Here to Help
The implementation of the NAR settlement marks a significant shift in the residential real estate industry. At McGregor Palms Realty, we are committed to staying ahead of industry changes to provide our clients with the best possible experience. Our team is fully informed and prepared to navigate these new regulations, ensuring that your real estate transactions proceed smoothly and transparently at all times.
If you have any questions about how these changes might impact your real estate sale or purchase, please don't hesitate to reach out to out expert team. When it comes to Florida real estate, we are here to guide you every step of the way.
