New Rules on Commissions and Buyer Agent Fees

4 minute read

The National Association of Realtors (NAR) recently settled a lawsuit that will reshape how agent compensation and home listings are handled. This has been a highly anticipated change for the real estate industry, and many are eager to understand its implications for different parties involved in a typical real estate transaction.

Here’s a breakdown of the key changes and what they might mean for you:

More Flexibility in Negotiations: Traditionally, sellers have shouldered the responsibility of paying commissions to both their own agent and the buyer’s agent. While not fixed, these commissions typically range from 5% to 6% of the selling price, with the buyer’s agent commission being displayed on listings through the NAR’s Multiple Listing Service (MLS). However, under the new guidelines, sellers are no longer automatically obligated to pay the buyer’s agent commission. This opens the door for a more flexible negotiation process between buyers, sellers, and their respective agents. This newfound flexibility could potentially lead to lower commission costs for all parties involved, and ultimately, lower home prices.

Changes to MLS Listings: Previously, potential buyers could easily see the compensation offered to the buyer’s agent on MLS listings. With the new regulations, this information will no longer be included in standard MLS descriptions. This shift removes a pre-determined cost element from the initial stages of the buying process and allows for more upfront negotiation around agent fees between buyers, sellers, and their agents.

Impact on Lenders: For those concerned about loan eligibility, Fannie Mae, Freddie Mac, and FHA have all clarified their stance. As long as the practice of sellers paying buyer’s agent commissions aligns with local customs, these payments will not affect loan eligibility. Additionally, despite the Department of Veteran Affairs holding a policy that prohibits buyers (veterans) from paying these fees, VA Deputy Director Michelle Corridon made comments suggesting plans to temporarily lift the ban. Though not confirmed as an official announcement, the message gives veterans hope for representation in light of these shifts.

This is a significant change on the real estate market, and its full impact is yet to be seen. Sellers will have more control over agent fees and should explore their options to potentially negotiate more favorable commission structures. And with the statements from the VA official, sellers won’t have to worry about limiting their buyer pool. Buyers, on the other hand, can discuss commission structures with their agents and consider potential cost savings as negotiations become more flexible. Stay tuned for further updates as the industry adapts to these new guidelines.

Regardless, rest assured that the agents and property managers at Turner Brothers are committed to staying up-to-date and well-educated on any and all policy changes. As the market adapts, so do we, with the unwavering commitment to ensuring you are protected and satisfied with your sale or purchase.

If you would like to submit a serious inquiry, please reach out HERE or give us a call at (254)759-8027.

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