The recent National Association of Realtors (NAR) lawsuit settlement, which changes how compensation to Brokers is handled across all states, goes into effect on August 17, 2024. The settlement prohibits the publication of compensation to brokers in the MLS. These negotiations will now have to take place outside the MLS system. This new framework aims to increase transparency in real estate transactions, allowing all parties to negotiate terms more openly, rather than it being compulsory.
Since some owners may opt not to cover the buyer’s broker compensation, this shift might influence home prices, buyer affordability, and the need for a more professionalized buyer process. Sellers who wish to ensure their property is shown to the greatest number of potential buyers may choose to negotiate and compensate the buyer’s broker directly.
IMPORTANT ITEMS TO KNOW
MLS Commission Display: Sellers can no longer advertise buyer commissions on the MLS. However, they can still do so on flyers, social media, and non-MLS websites.
Buyer Broker Agreements: Only buyers who have signed a Buyer Broker Agreement will be allowed to tour your home, ensuring that buyers are represented during negotiations.
Seller Concessions: Sellers can offer concessions to buyers for various purposes, such as covering closing costs or providing allowances for home improvements. These concessions need to be clearly outlined in the contract.
Contractual Clarity: Any concessions offered must be detailed in the contract, specifying their intended use, as this information is required by lenders for underwriting purposes.
Negotiable Compensation: While sellers must agree on compensation with their listing broker before going on the MLS, this compensation can be renegotiated with each buyer’s offer based on the terms and conditions.
Transparency in Offers: The settlement emphasizes the importance of transparency in real estate transactions, particularly in how commissions and concessions are communicated to all parties involved.
Impact on Closing: The way concessions and commissions are structured may impact the closing process, particularly in how lenders review and approve the transaction.
Legal Compliance: Sellers need to ensure they comply with all new regulations resulting from the settlement to avoid legal complications during the sale process.
Why You Should Consider Offering to Pay the
Buyer’s Broker Commission
Attract More Buyers: Offering to pay the buyer’s broker commission broadens the pool of potential buyers, making your home more attractive to those who may be deterred by having to cover their agent’s fees themselves.
Faster Sale Process: By incentivizing buyer’s agents, you’re more likely to attract serious, qualified buyers who are ready to close quickly, reducing the time your property stays on the market.
Negotiation Leverage: The commission you offer is negotiable and can be used strategically during negotiations. It can help smooth over issues like repair requests or appraisal discrepancies, making it easier to finalize the sale.
Avoid Failed Closings: Experienced buyer’s agents, motivated by a commission, are more likely to bring well-prepared buyers to the table. This reduces the risk of deal fall-through, saving you the costs associated with delayed or failed closings.
Market Competitiveness: In a competitive market, offering to pay the buyer’s broker commission can give your listing an edge, making it more appealing compared to similar properties where buyers might need to cover their own agent’s fee
For any questions or to discuss your unique situation,
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