What The NAR Settlement Means For Buyers And Sellers
The recent National Association of Realtors® (NAR) settlement will update the long-time practice of sellers paying commissions towards agents who introduce a buyer to a property. In short starting mid-July, Realtor® members who are listing property will no longer be able to share compensation offers to buyer's agents through the MLS. Instead, buyers and their agents will be required to have their own upfront written agreements specifying the fee for these real estate services. Though the changes are still under construction, they will most likely shift some of the ways buyers and sellers approach real estate transactions.
what this means for sellers
Up until now, Sellers who listed their property with a brokerage were advised of a practice to offer a portion of the commission they were paying to the agent who brought a buyer to their property. The definition of the currently-named "buyer broker" shifted throughout the years, but the bottom line was the same: the Realtor® brokerage who listed your property was usually sharing a portion of the commission you paid with someone else, the numbers being agreed upon and advertised to buyer's agents up front, for the seller's ultimate benefit under this system.
What will not change? Commission amounts were and will remain negotiable. Property sellers always were and will still be encouraged to shop around for the broker they feel is offering the service and expertise package most suitable to the seller at a rate the seller is comfortable with.
What will change? Going forward, NAR will prohibit all up-front offers of compensation directly to buyer's brokers via the MLS. For sellers, this means that the commission amount you agree to pay your listing brokerage may look a little more complex than the previous up-front shared amounts. You and your agent will need to discuss the potential additional work the listing brokerage will need to perform if buyers, due to the new requirements, choose to not hire and pay for their own agents; or your options if buyers ask you to pay their broker as a condition of their offer; and many other scenarios that will result from this shifted commission model. Your agent should guide you through your options and what to plan for in light of the best marketing strategy to ultimately bring you the highest sale price for your property.
what this means for buyers
On the flip side of the issue, buyers in Illinois up until now were often able to work with brokers without any written agreement to cover their compensation out-of-pocket. This was because a share of compensation was being offered up-front by the seller's brokerage right in the MLS, and your agent was aware of how much they would get compensated for their work before they step foot with you into a particular home.
What will not change? The market was and will remain competitive. In order to secure a good purchase on good terms, you must be strategic and educated. Buyers should always keep this in mind when navigating the market and choosing whether to hire an agent, and if so, who to hire for their best interests.
What will change? Going forward, buyers will be required to sign a written agreement to work with a Realtor®, who will not be offered any guaranteed compensation directly via the MLS. This means that, if you would like to have a Realtor® working on your side, you would need to agree on a compensation amount that you would have to pay them for this work. Before you panic -- know that everyone in the US is in the same boat, and there are many ways to ask for coverage for these fees to be built-in to your purchase contract. Talk to and interview experienced Realtors® to learn more about your specific options in your current market and on your financial terms before you commit to an agent and rate you are comfortable with.
As always, consumers in the real estate world should be making decisions that will be best for them within the options available. The arhome team operates under leadership with 38+ years of top-performing experience in the real estate industry -- we are here to help! Contact us for any real estate needs to and learn your best options.
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