A note from the Team Leader, Erica…
As of today, August 17, 2024, significant changes resulting from the National Association of Realtors (NAR) settlement will officially take effect across the nation, aimed at bringing greater transparency and fairness to the real estate industry. However, if you’re in Arizona, you’re already a few steps ahead. Our local MLS and the Scottsdale Realtor Association have been proactive in implementing these changes since the beginning of August. This early adoption has allowed us to fine-tune our processes and ensure a smooth integration into our daily operations, providing our clients with a more seamless experience during this transition.
In my previous blog post, Navigating the NAR Settlement: Debunking Myths and Clarifying Real Estate Realities, I discussed some of the common misconceptions surrounding the NAR settlement and what it really means for buyers and sellers. Today, I want to focus on the practical changes you’ll see in your real estate transactions moving forward and how these updates can positively impact your experience in both the short and long term.
Key Changes You’ll Notice
- One of the most significant changes is the approach to how commissions are handled. With an emphasis on transparency, buyers and sellers are required to have open discussions with their agents about compensation. It’s important to remember that commission rates are still fully negotiable between both parties and their agents.
- When searching for an agent, it’s now more crucial than ever for consumers to ask questions about compensation and fully understand what services they’ll receive in return. This understanding is vital, especially with the new requirement that buyers must sign a written employment agreement with their chosen broker before touring a home—whether in person or virtually. This agreement will outline the services provided, the cost, and how the agent will be compensated.
- If a seller has not offered compensation to the buyer’s agent, the buyer can request that the seller compensate their agent as part of the purchase offer on an addendum to the purchase contract. However, if the seller declines, the buyer is still responsible for paying their agent, as agreed upon in the written employment agreement. This highlights the importance of having a clear, upfront agreement to avoid any surprises.
- It’s also important to note that while buyers must have a written agreement when working with a broker to view homes, they are not required to have one simply to speak with a listing agent at an open house or inquire about an agent’s services.
- Another key point is that current regulations do not allow agent commissions to be financed as part of a mortgage, and this remains unchanged. However, buyers do have the option to request seller concessions, which can be used to cover the buyer’s agent’s professional fee. This can be an effective way to manage costs, so it’s worth discussing with your agent during negotiations.
- In terms of listing practices, while a listing broker or seller can still offer compensation to the buyer’s agent, there are new limitations on how this offer can be marketed. Specifically, brokers can no longer display offers of compensation on the MLS website. Additionally, any offer of compensation from a seller must now be explicitly approved by the seller in writing, ensuring full transparency in the process.
These changes are all about empowering consumers through greater transparency and choice. And as always, agents who are REALTORS® remain ethically obligated to work in the best interest of their clients, ensuring they receive the highest level of service and support.
While I empathize, that change can be daunting, the new practices in commission structures are designed to create a more transparent and competitive market, ultimately leading to better outcomes for both buyers and sellers. These changes aim to improve the industry and enhance your real estate experience, ensuring you feel more informed and confident throughout the process. As always, if you have any questions or concerns about how these updates might affect your buying or selling goals, I’m here to help. Contact me for personalized guidance and support as we navigate this evolving landscape together.
