The recent settlement involving the National Association of Realtors (NAR) has introduced significant
changes for both homebuyers and home sellers in the U.S. real estate market, starting from August
2024.

Key Changes for Homebuyers:
1. Buyer's Agent Commission: Homebuyers may now be responsible for paying their buyers' agent
commission. Previously, this was typically covered by the seller. This change could mean added
costs for buyers, though they have the option to negotiate who covers the commission during
the home purchase process.

• The Good News: Your agent can negotiate on your behalf to ask the seller to pay all or some of
  the buyer agent fee to assist you in the purchase of a home. Historically, the seller has covered this
  fee, so it is not a change from what the industry has historically done. Commissions
  have ALWAYS been negotiable.

2. Written Buyer Agreements: Buyers will now need to sign a written agreement with their agent
before touring homes. This agreement will outline how the agent will be compensated, adding
transparency and reducing surprises later in the transaction.

• The Good News: This is not new. Some states and some agents have always required a
  homebuyer to sign a buyer agreement before helping a buyer to purchase a home.
  Keep in mind, before you list your home for sale, a seller is required to sign an
  agreement with the listing agent. It’s just a good idea for both the buyer and the agent
  and the seller and their agent to both understand their rights and responsibilities during
  the purchase or sale.

3. Increased Cost Transparency: As buyers may now be required to pay their agent directly, there
will be greater clarity regarding the fees involved in buying a home.

• The Good News: Buyers will have a clearer understanding of what they are paying for,
  which can help them make more informed decisions. Now, who you hire to help you
  purchase your next home will be even more important than ever. Buyers, who used to
  walk into an open house and just use the first agent they see, will now want to make
  sure that the agent they hire is working for their best interests, is experienced, has great
  negotiating skills, and can help them purchase the home at the best price, in the
  shortest amount of time, and with the least hassle.

Key Changes for Home Sellers:
1. No Obligation to Pay Buyer's Agent Commission: Sellers are no longer required to pay the
buyers' agent commission. This change may affect the overall negotiation dynamics, as buyers
might now ask sellers to contribute to this cost during price negotiations.

• The Good News: While the seller is no longer required to pay a buyers' agent
  commission, it is in the seller’s best interest to do so for a number of reasons. Paying
  part or all of a buyers agent’s commission incentivizes the agent to show their home,
  thereby increasing their property’s exposure to the market. It can also help the
  property to sell faster because of the increased exposure to agents and their clients.

2. Potential Impact on Home Pricing: With buyers potentially bearing more of the transaction
costs, sellers may face increased pressure to adjust home prices to accommodate these
additional buyer expenses.

• The Good News: Historically, sellers have paid a commission to their listing agent, who
  in turn offered a portion of that commission to the agent who represents the buyer. If the
  listing agent now only asks for a commission to represent the seller, and the buyer’s
  agent asks the seller to contribute an amount to cover their buyer agent fee, home
  prices should not have to be adjusted higher. The only thing that changes is the way the
  commission to the buyer’s agent is paid.

3. MLS Compensation Listings: Compensation offers for buyer agents will no longer be listed on
Multiple Listing Services (MLS). This change will alter how agents and clients discuss and
negotiate fees, potentially making compensation discussions a more direct and transparent part
of the buying and selling process.

• The Good News: Buyer agents in California can request from the seller through the
  listing agent how much the seller is offering in commission to the buyers' agent to cover
  the fee the buyer owes their agent. Some listing agents in California are disclosing the
  commission they are willing to pay the buyer’s agent in various ways, such as, on sign
  riders, their website, and on their company’s website.

The bottom line: Overall, these changes are expected to bring more transparency and fairness to the
real estate market, but they also shift some financial responsibilities and negotiating dynamics for both
buyers and sellers. But the reality is that not much has changed, just increased transparency. And that
is always good news.

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