In mid-August, significant changes to real estate transactions were introduced following the Department of Justice’s settlement with the National Association of Realtors. With a month now behind us, the industry has been adjusting to these updates. While some changes are straightforward, others require a bit more understanding. Here’s a breakdown of the key shifts shaping the market.
Seller-to-Buyer Broker Commission Disclosure
One of the most notable changes affects how seller concessions to buyer’s brokers are communicated. Sellers can no longer disclose the amount they are willing to pay a buyer’s agent via the Multiple Listing Service (MLS). However, this information can still be shared through various other methods, such as emails, flyers, advertisements, and websites.
For sellers, this change offers flexibility in how they present this information. Experienced sellers understand that making it easier for a buyer to cover their agent’s commission can facilitate a higher purchase price. By including the buyer agent’s fees in the total purchase price, buyers can finance those fees, which can make the transaction smoother. There is some nuance involved, so it’s always a good idea to discuss these details with your real estate agent.
Commission Acknowledgment Forms
Before a buyer’s agent can show a property, the buyer is now required to sign a form that outlines how commissions are handled. This document also clarifies who the agent represents—whether they’re working for the buyer or the seller—and binds the buyer to either an exclusive or non-exclusive working relationship with that agent.
This new form is designed to ensure transparency in the process, giving buyers a clear understanding of the agent’s role and the commission structure before they move forward with a property tour.
Open House Sign-In Sheets
Under the updated rules, open house hosts must provide sign-in sheets at all events. These sign-in sheets serve to clarify that the host represents the seller, not the buyer. Visitors are asked to sign in upon arrival, reinforcing the agency relationship between the host and the seller.
The Risks of “Double Ending”
One unintended consequence of the new regulations is the misconception some buyers have that they might secure a better deal by working directly with the listing agent. While this might seem like a cost-saving measure, it’s often not in the buyer’s best interest.
Relying on the listing agent, who represents both the buyer and seller, is like expecting a prosecutor to also serve as the defense attorney. The listing agent’s primary duty is to the seller, and their goal is to complete the sale, not necessarily to protect the buyer’s best interests. Having a dedicated buyer’s agent ensures that someone is negotiating on the buyer’s behalf, potentially saving more money and future complications than any perceived discount from dual representation.
Disclosure and Signing Requirements
According to the new guidelines, before any agent—whether a listing agent or a buyer’s agent—can show you a property, they must first disclose how they will be paid and have you sign forms acknowledging your relationship. These disclosures are part of an ongoing effort to bring more transparency into real estate transactions.
Navigating the New Rules
Because these changes are still in their early stages, expect further adjustments as the industry adapts. The details of implementation may continue to evolve, and it’s essential to stay informed. Buyers and sellers alike should consult their real estate agent regularly for updates and guidance. As always, if you have any questions, don’t hesitate to reach out to a real estate professional.
