The process of purchasing or selling a home has recently undergone significant changes. The changes have gone into effect and affect how people buy and sell homes, particularly when paying out commissions to realtors.
The new real estate commission law empowers realtors, including those looking to purchase or sell their homes, to make informed decisions. But how does this new law work? Keep reading to learn more!
How The New Real Estate Commission Law Work
A property buyer or seller’s ability to make informed decisions is crucial in the real estate business. That’s something commercial real estate intelligence platforms like realmo.com do. These platforms help to foster transparency in the U.S. real estate sector.
Let’s focus attention on the changes to the real estate commission law. How are property buyers and sellers now paying their commissions to agents? What changes has the new law brought into the real estate sector?
First, here’s a quick summary:
- The period when sellers were required to pay both commissions upfront no longer exists. In other words, the new real estate commission law forbids sellers from paying upfront for both commissions.
- Buyers’ agents’ commissions will no longer be made known in the listing.
- Buyers and agents now have to negotiate commissions directly. The new law empowers buyers to pay their agents directly instead of shifting the cost to sellers. In the past, sellers had to cover the cost indirectly. This ensures transparency and offers buyers the opportunity to choose the best services.
The latest real estate commission law gives property buyers, sellers, and agents the flexibility the real estate industry has been seeking. Agents are now actively looking for clients and offering customized services, including competitive rates, to lure them in.
With agents having the freedom to offer customized services and rates, property buyers and sellers can now seek agents who align perfectly with their needs. This makes the real estate market more competitive than ever. Property buyers, sellers, and agents can now negotiate commissions directly.
The Latest Real Estate Commission Law (Notable Changes)
One of the most notable changes of the new realtor commission law is that listing agents representing home sellers can no longer request a commission from buy-side agents on the National Association of Realtors (NAR) affiliated Multiple Listing Service. That wasn’t the case in the past.
The new changes also allow agents of home shoppers to have a written contract of their commissions before showing potential home buyers the property in question. Both parties can negotiate the fee before signing a contract. The contract gives the buyer-side agent confidence that he or she will be paid once the deal is closed.
In the past, NAR only encouraged but didn’t make it mandatory for buyer-side agents to have written contracts with potential home buyers. It is now mandatory for them to have a written agreement before they can even see the property.
Does the new realtor commission law forbid listing agents from posting buy-side commissions online?
Agents can list commissions online. The latest model only forbids them from listing buy-side commissions on a NAR-affiliated multiple listing service.
Agents can list commissions on their brokerage’s website, as the new realtor commission law doesn’t prohibit this. Agents can also negotiate on buy-side commission verbally, via email, calls, or text messages.
Benefits of The New Real Estate Commission Law
Most people may argue that the new realtor commission law favors property buyers and sellers more. Here is how the law puts home buyers and sellers in the driver’s seat.
Home Buyers: Buying a home used to be less transparent, and agents controlled how much commission they were willing to accept. Back then, people purchased homes without knowing the commission, as the agents decided how much they wanted to charge. This means one could pay more than budgeted for a property.
The new law now puts home buyers in the driver’s seat. Home buyers and their agents negotiate the commission beforehand, so home buyers will know how much commission they will be paying before striking a deal.
Another benefit of this new law is that it allows home buyers to shop for agents like other professional services. Buyers can now compare services and rates to identify the right agent who meets their goals.
The new law makes the real estate business more competitive for agents. Agents now offer competitive prices and custom services to capture clients’ attention. This will lead to lower agent fees, potentially freeing up more funds for buyers to purchase their dream homes.
The new realtor commission law fosters transparency, which the real estate industry has been yarning for, for so long. Buyers can now pay their agents commission directly, ensuring they get great value for their money.
Home Sellers:
The new realtor commission law also benefits sellers immensely. It gives sellers more control and power over their costs. In other words, sellers can decide whether to offer commission to buyers’ agents or deploy other tactics, such as emphasizing their property’s peculiar selling point to attract buyers. This makes selling a home more efficient and transparent.
Conclusion
You can see how the new real estate commission law works. It is a game changer. The law ushers in the transparency and flexibility the real estate industry has lacked for many years.
The new realtor commission law has made the real estate market more competitive for agents and home sellers. Agents must now be more creative, providing custom services and competitive rates to bolster their chances of landing more clients. It is now the survival of the fittest.
Buyers can now negotiate commissions and understand how much they pay their agents before proceeding with a deal. Furthermore, sellers now hold more control over their costs.
