Rule Changes
In the settlement, the National Association of Realtors (NAR) agreed to make changes to its rules that will affect MLSs owned by REALTOR® associations, agents who list or show houses on MLSs, and agents who are members of NAR. These changes will likely take effect mid-July 2024, and they are summarized below:
1. Buyer Representation Agreements Required. Agents working with buyers must sign a written buyer representation agreement with the buyer before the agent can show a home listed on an MLS. The buyer’s reps must disclosure compensation in a set amount (percentage or dollar).
2. Offers of Cooperative Compensation Cannot Be Made On the MLS. MLSs must eliminate all broker compensation fields on the MLS and prohibit the sharing of offers of cooperative compensation in any other MLS field.
3. Offers of Cooperative Compensation May Be Made Off the MLS. Nothing in NAR’s settlement prohibits sellers or listing agents from making offers of cooperative compensation to buyer agents off the MLS (e.g., by email, newsletter, calls, texts, etc).
4. Brokers Can Publish Offers of Cooperative Compensation for Their Own Listings on Their Own Websites. Although MLSs are prohibited from publishing cooperative compensation offers, the settlement allows brokers and their agents to publish seller-approved cooperative compensation offers for their own listings (but not other brokers’ listings) on their own websites.
5. Agents Must Make Commission Disclosures. Agents must disclose in listing agreements, buyer representation agreements, and pre-closing disclosures that broker commissions are not set by law and are fully negotiable. NAR must require REALTOR® Boards and MLSs to include these disclosures in any form agreements they publish.
What this means to us as agents: The big change for us as buyer's agents is that we won't know how much we're getting paid until we make an offer. In Texas, there's a part in our Buyer's Representation agreement that talks about how we get paid. Usually, it's the seller's job to pay us. But if they don't, the buyer might have to cover it. Some agents make buyers pay this extra cost, which can be anywhere from 0.5% to 2% of the home's price. At Wilson Realty Team, we've never made our buyers pay this extra, and we hope to keep it that way. We're not all about money, but we can't work for free either!
For sellers who don't want to pay our commissions or want to pay less, here's what might happen:
1. Lower sales prices. While the commissions aren’t disclosed on MLS, buyers will submit offers with buyer’s agent commissions as a negotiable piece. Many buyers don’t have the cash to pay their agents themselves at closing so in return they will have to lower sales price in order to make up a difference.
2. Unrepresented buyers. As listing agents, this makes us cringe. It not only makes our jobs much more difficult, but it also sets agents who aren’t equipped with intermediary knowledge up for lawsuits.
This was written by our friend and fellow KW agent, Jason Otts:
Imagine a buyer wanting to see 15 houses on a Saturday. Without someone paying a buyers agent….that buyer will be calling all 15 listing agents, and trying to arrange showings, find out details, determine if the listing agent priced it correctly, and prepare to negotiate a contract that the buyer has never read, and does not know how to interpret. On the flip side, the Listing Agent is now getting calls from buyers at all hours of the day, asking to see the house. These showing times will be greatly reduced if the listing agent is to open every door. Also, the listing agent will have to get a pre approval from every buyer and determine if they are even qualified to see the house. After all is said and done, the parties will attempt to write an offer. The listing agent can’t consult with the buyer - because they have a fiduciary duty to the seller. How does a sellers agent get the most money for the seller while also representing a buyer who wants to pay the least? It’s a conflict in my opinion. If the buyer does not have representation then the buyer is left without expert advice, to write, present, negotiate a contract, hire an inspector, negotiate repairs, negotiate appraisal issues, schedule walk throughs, and attempt to get to the closing table on their own.