What the NAR Settlement Means for You
If you’ve been keeping up with real estate news, you might have heard about the recent changes stemming from the National Association of REALTORS® (NAR) settlement. This settlement has introduced some significant updates to how commissions are managed in real estate transactions. Let’s Understand it down and see how these changes might impact you as either a seller or a buyer.
What’s Changed?
- Commission Information No Longer in Listings: Previously, property listings would show how much commission the seller was offering to the buyer’s agent. Starting August 17, 2024, this information will no longer be visible in listings. This shift means sellers now have more control over whether they want to offer a commission to the buyer’s agent.
- Buyer Broker Agreements (BBA): If you’re in the market for a new home, you’ll need to sign a Buyer Broker Agreement with your agent before they start providing services. This agreement outlines the services your agent will offer and details how much you’ll need to pay them.
How Does This Affect Sellers and Buyers?
For Sellers:
- More Control: You now have the flexibility to decide if you want to pay a commission to the buyer’s agent. However, since this information won’t be displayed in listings anymore, make sure you communicate clearly with your broker about how commissions will be handled to avoid any surprises down the line.
For Buyers:
- Responsibility for Payment: You’ll be directly responsible for paying your agent according to the Buyer Broker Agreement. If the seller doesn’t offer to pay your agent’s commission, you’ll need to cover this cost yourself.
What Should You Do?
For Sellers:
- Review Your Listing Agreement: Before you put your property on the market, understand how commissions will be managed. Decide if you want to offer a commission to the buyer’s agent and discuss this with your broker.
- Negotiate: With these new rules, you might have more room to negotiate commission details with your broker. Ensure everything is clearly defined in your agreement to avoid any confusion.
For Buyers:
- Sign the Buyer Broker Agreement: Be prepared to sign this agreement before you start house hunting. It will detail the services your agent will provide and their compensation.
- Budget for Commission: Since you might need to pay your agent out of pocket, make sure to factor this into your budget when searching for a new home.
For Both Sellers and Buyers:
- Ask Questions: If you’re unclear about any aspect of these new rules, don’t hesitate to ask your agent or broker. Understanding your responsibilities and the costs involved will help ensure a smooth transaction.
Conclusion
The NAR settlement has brought changes to how real estate commissions are handled. Whether you’re selling or buying a home, it’s crucial to familiarize yourself with these new rules and plan accordingly. This will help you navigate the real estate process with greater clarity and ease.
