You may have recently heard about the National Association of Realtors (NAR) lawsuit, particularly its impact on buyer agent compensation. This has left many buyers and sellers wondering what these changes mean for the real estate market and how transactions will be affected.
Some industry professionals view this lawsuit as a major shakeup, while others consider it a minor adjustment to existing practices. The key change lies in how Realtor compensation is structured and documented. Here’s a quick breakdown of what you need to know.
What’s Changed in Realtor Compensation?
The biggest shift, post-lawsuit, is that buyers agents can no longer assume that their compensation will automatically come from the seller. Under the new rules, the buyer’s agent compensation is now a negotiable part of the transaction.
One important detail is that buyer's agents can now receive their compensation directly from the buyer, instead of only from the seller. While this option has always been available, it was rarely used. In my many transactions as a Realtor, we’ve never had a buyer directly pay their agent’s compensation.
This new structure might encourage a small group of buyers, particularly those with extra financial flexibility, to use this as a negotiating tool when buying a home. However, most buyers are still unlikely to shoulder the extra cost due to other financial obligations like down payments and closing fees.
Will the New NAR Rules Have a Big Impact on the Market?
While the rules around Realtor compensation have changed, the overall impact on the real estate market is expected to be minimal. In Colorado, we're currently seeing a shift toward a buyer’s market. This means that more homes are available, and properties are sitting on the market longer.
Given the higher home prices in Colorado, most buyers aren’t in a position to pay their agent's compensation out of pocket. Sellers, to remain competitive, will likely continue to offer compensation to buyer’s agents to attract qualified buyers. In most cases, the process of buying and selling will feel much the same as it always has.
How Will Buyers and Sellers Know About Buyer Agent Compensation?
With the new NAR guidelines in place, real estate agents are finding new ways to communicate buyer agent compensation outside of the MLS. One effective strategy is including compensation information in virtual tours or even listing it on yard signs. This ensures both buyers and agents can easily access these details, while browsing homes online or in person.
Virtual tours, now common on most listing platforms, offer an easy way for buyers to view homes and understand any related compensation structures before making an offer.
Navigating Realtor compensation can be tricky, especially with recent changes following the NAR lawsuit. Chris and Melissa take the extra time and effort to attend real estate classes and specific contract training to give their buyers and sellers the confidence that their agents are knowledgeable and up-to-speed with all of the contract changes, as it pertains to their transaction. If you're a homebuyer or seller in Colorado and unsure how these changes impact your real estate plans, please reach out - Chris and Melissa Lombardo are here for you and happy to help!
As experienced Realtors, we can help guide you through this evolving landscape, ensuring you’re informed and prepared for your next real estate transaction.