If you haven’t been following the real estate market lately, you may have missed the latest news to affect the homebuying process. Earlier this year, the National Association of Realtors settled a class action lawsuit over alleged antitrust violations, which resulted in slight changes to how real estate transactions occur moving forward. Though the NAR affirms that agent commissions have always been negotiable, the center of the issue is the communication and transparency of consumer information. As a result, the consumer is now more informed when entering a transaction, and though current homebuyers may have been affected the most, the long-term benefit of the settlement lies within the homebuyer’s control in the process.

So what’s changed?

Agreements between a buyer and broker via an agent are now required before an agent is permitted to show a home.

Though buyer agreements have been strongly recommended for decades, most real estate buyer-agent relationships had been solidified through an Agreement of Sale. Buyer agent compensation is Included in this agreement. Prior to August 17th 2024, buyer agents were typically paid by the seller through what is known as a broker cooperation agreement. Essentially, a seller’s agent was paid a commission by the seller then split that commission with a buyer agent for bringing the buyer to the table. The buyer didn’t need to put up the funds necessary to pay their agent because compensation came from the seller. That has since changed. A buyer is now responsible for compensating their agent as agreed to in the buyer agency contract, and that number has to be specific in the BAC, whether a percentage of the sale price, a flat amount, or any other agreed upon number.

What’s important to note is that agent commissions are negotiable. When buyers are about to work with an agent, they should have conversations upfront about what the agent will do and what their time and efforts are worth. Also, buyers do not need a contract to speak with an agent at an open house or inquire about their services.

During this post-settlement transitional period, buyers may be better informed about their options but may not be financially prepared to incur these extra costs. Fortunately, support may still come from the seller. In an Agreement of Sale, two categories under Seller Concessions define how buyers may request financial support. Sellers may offer a buyer broker fee or closing cost assistance. The buyer broker fee refers to a buyer asking a seller to cover some or all of their agent’s commission. Sellers may still approve a seller’s agent to share a portion of the commission with the buyer agent as had been done in the past. All that transaction requires is an additional form that recognizes the agreement between two cooperating brokers. This section asks a seller directly for support. Closing cost assistance, formerly known as a seller’s assist, provides money back to a buyer at closing to pay for costs not associated with buyer broker fees. So whether it’s support with an agent commission or additional closing costs, a buyer may receive assistance from the seller to secure the deal. Other options for buyers to find additional funds should be discussed with a mortgage lender.

But why would a seller offer assistance to a buyer’s agent? For the simple reason that sellers still need buyers. Even in a seller’s market, more buyers means stronger offers. Sellers who fail to offer some sort of cooperation this soon after the settlement changes could be losing out on an opportunity to reach motivated buyers.

The second change to come out of the settlement for buyers focuses on the role Multiple Listing Services play in the sharing of information. MLSs are the most prominent way brokers share information with other brokers. After August 17th, 2024, seller agents are not permitted to advertise buyer agent compensation through the MLS. Sellers can still offer buyer agent compensation, as stated earlier, but must relay that information through other forms of communication (conversations, company website, flyers, signs, social media, etc.). A buyer’s agent can’t just rely on the information through MLS. They will need to pick up the phone or check another source.

In the end, the recent changes from the NAR settlement should bring more awareness to the buyer about the process of real estate transactions and encourage transparent conversations about a buyer-agent relationship. That in itself, should help buyers navigate one of the most stressful financial decisions of their life.

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