If you follow real estate at all, you’ve probably heard about the recent changes that have come about because of the settlement between the Department of Justice (DOJ) and the National Association of Realtors (NAR). The headlines might make it sound like everything is turning upside down, but that’s not really the case. Let’s break it down so it’s easy to understand.
Two main things have changed because of this settlement:
1. No More Posting Commissions in MLS
First, commissions can no longer be listed in the multiple listing services (MLS) that real estate agents use. Some people are thinking this means sellers don’t have to pay commissions anymore. But here’s the truth: Sellers have never had to pay commissions; it’s always been something that could be negotiated. That said, it’s usually in the seller’s best interest to pay them. Why? Because paying commissions often helps sellers get the best price for their home.
2. Agents Must Disclose Commissions to Buyers
The second big change is that agents now have to sign an agreement with buyers that spells out how much the agents charge in commissions before they can even start showing homes. You might wonder, "Why does this matter to sellers?" Well, here’s the deal: In the past, I didn’t have to talk to my buyers about commissions. Now, I do. I have to let them know upfront what the seller is offering in commission. If the seller is offering less than what I’ve agreed with the buyer, then the buyer has to decide whether they’re okay with paying the difference or if they want to skip looking at that house altogether.
This means that a smart seller will offer a competitive commission rate to make sure they attract the right buyers. Otherwise, they might miss out on some really good offers.
Why It’s Still a Good Idea to Pay Commissions
Another thing to keep in mind is that current home values are based on recent sales, and those sales include the commissions that were paid. Essentially, it’s the buyer who ends up paying the commissions, since they’re the ones getting a loan to purchase the home. The seller just agrees to pay the commissions out of the money they make from the sale.
Plus, don’t you want a competent agent on the other side of the transaction to make sure everything goes smoothly? There’s nothing worse than dealing with a bad agent. A good agent knows their value and can explain that value to their buyers. So, even though there are changes, most commissions will probably still be paid the same way they always have been.
In short, while these changes might seem confusing, they’re really just about making sure everyone knows what’s going on. Sellers should still consider offering competitive commissions to attract the best buyers, and buyers will be more informed about what they’re paying for.
As always, I am here if you have any questions.
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