The new way of doing business in real estate.
Important Points:
What has changed? Due to a major lawsuit against the National Association of Realtors, Realtors will no longer publicize in the Multiple Listing Service what they are willing to pay the agent who brings the buyer to the sale.
The result is that buyers will have to pay their agents for representation, or they can ask their agent to include in the offer a request for the seller to pay their agent’s commission. This will require the buyer to sign a buyer representation agreement with their agent. Otherwise, no compensation will be paid.
Agents can’t work for free, so it’s possible the buyer will have to find another home.
The impacts will be first felt by first-time, FHA and VA buyers who are limited in financial resources and may not be able to pay their agent. VA has changed their policies and allow VA buyers to pay their agent if necessary.
Buyers will have to pay their agents for representation,
or they can ask their agent to include in the offer a
request for the seller to pay their agent’s commission.
Open House visitors are asked to sign in and advised that the agent represents the seller only. Prior to agents showing property to buyers, they must have a signed Buyer Representation and Broker Compensation Agreement. It outlines the buyer’s agreement to pay their agent in the event the seller does not.
The lawsuit claims sellers did not know the commission was shared with the agent representing the buyer and they had no option but to pay 6%. In California, this is not possible. The listing contract states commissions are negotiable, and a 6% fee is rare.
Listing agents are having frank conversations with sellers. If sellers stop compensating buyers’ agents, they could be the last home to sell. If they continue the traditional practice, they could be the first.
The lawsuit settlement was $418 million, signed by 220,000 home sellers. It is estimated each seller in the class action suit will receive from $1,000 to $2,000. Attorney’s fees will take the rest.
If sellers stop compensating buyers’ agents,
they could be the last home to sell. If they continue
the traditional practice, they could be the first.
What is needed now is for informed, intelligent, and seasoned agents to continue representing buyers and sellers. What is new is the contract between the buyer and their agent of choice and the disappearance of compensation to cooperating agents in the MLS.
In the last four decades, the industry has experienced many changes, but none like this one. We are being trained within our offices to manage this one so we can continue serving homeowners and home buyers.
_Kay Wilson-Bolton has been a Realtor in Santa Paula since 1976 and is a broker associate with Century 21 Real Estate Alliance. She is also a property manager. She can be reached at Kay She has been in real estate since 1976. She can be reached at _kay@realestatemagic.com or 805.340.5025.
She is a probate and Certified Divorce Specialist and property manager