Huge Changes in Residential Real Estate - Lake Martin Voice - Lake Martin Real Estate - Waterfront Homes, Lots, Property For Sale

Huge Changes in Residential Real Estate

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July 1, 2024
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July 9, 2024
Huge Changes in Residential Real Estate

We real estate agents love hyperbole.

We can admit it. Everyone claims to be a top producer – (is that even mathematically possible ?). Every home is perfect. Every view is the “best ever.” Every location is “the best on Lake Martin.”

I realize I risk sounding like the typical agent when I say this, but ….. the residential real estate business just changed in a huge way. Forever. Nationwide. It will never be the same.

And, here’s the important part : you will be affected. I’ll try to tell you what’s going to happen first, then why it will happen, and then end this article with a caveat.

Buyers will feel it first.

Nationwide, after about October of this year, anywhere you are looking at real estate, you will be required to sign a Buyer’s Agency Agreement in order to look at any piece of real estate.

Yes, you read that right. Anywhere, anytime, with any agent, that agent will be required to get your signature on a Buyer’s Agency agreement to see even one house.

Mind you, you don’t have to pay the agent.  The agreement won’t obligate you to pay them but be prepared to negotiate that with the agent. What you agree to pay the agent and the terms and conditions of that payment are totally negotiable and up to you and that agent.

Just because you aren’t required to pay the agent doesn’t mean you should be surprised when they propose that you do. After all, do you work for free? My advice to you is to do your research and decide what services you need as a buyer and what agent might be best suited to help you.

“Wait a minute,” you might be thinking. “Aren’t sellers supposed to pay the real estate agents? Has that changed?”

Buyers have always been able to pay their own agents. That hasn’t changed. What has changed is the requirement now that every agent must explain this Buyer’s Agency Agreement to you and help you figure out what type of service you need.  If you and the agent are a good fit, and you decide to hire them (at some amount you negotiate from $0 to infinity), you’ll sign up and see the homes. There is no standard rate. It’s all negotiable.

Please note – maybe you won’t have to pay your buyer’s agent. That maybe comes in to play because it is still legal (at this writing) for a seller to offer to pay compensation to an agent that brings the buyer.  However, the amount a seller might offer to pay an agent that brings a buyer may vary radically, from $0 to infinity. There is no standard rate. This is all negotiable. It’s conceivable that the “maybe” will be different on every home you see. Let’s say you and your agent are touring eight homes in one day. Your agent will be required to advise you on the amount, if any, that the seller is offering to pay to your agent and the amount, if any, of compensation you will pay according to the agreement you signed. There is no standard rate. It’s all negotiable.

There are lots of other changes but I think this one will be the one that buyers feel the most, and feel it most immediately.

Sellers will feel the rule changes in many different ways that are too legion to cover here. I’ll try to go over a couple, though. The first way sellers will notice the newness is when they’re sitting down with their listing agent to discuss the marketing of their home.

The potential listing agent will be required to clearly explain to you, the seller, your options on offering to pay a buyer’s agent. It’s always been optional, so that’s not a change.  But hopefully now it will be more clearly explained so that you as a seller may select the services and rates that most closely fit your goals. There is no standard rate, it’s all negotiable.

Sellers will also notice that they will be prohibited from advertising in the Multiple Listing Service the compensation, if any, that they have agreed to offer to a buyer’s agent.

Their listing agent will not be allowed to communicate the buyer’s agent compensation within the multiple listing service aka MLS. But on the positive side, they will be able to advertise it by other means such as company websites, telephone calls, texts, faxes, chalk boards, smoke signals, and cave drawings.

“Hang on,” the seller might say. “Won’t this prohibition limit transparency to the consumer, complicate communications between the agents, and overall make an already difficult process more tenuous?”

My lowly opinion is : yes to all three. But then again, mine is not to reason why.

So far, one MLS agrees with me and is saying “no thanks” to the NAR. Read more HERE.

So why are all these changes happening?

The National Association of Realtors (NAR) is a trade association of which a high percentage of real estate agents are members.

They, along with some national franchise companies, lost a huge class action lawsuit in Missouri. The original damages awarded were over a billion dollars but the NAR, ever the savvy negotiators, whittled that down to just under a half billion in a settlement.  Part of this settlement now being touted by NAR involves not only a cash payment to the lawyers (and the remainder to their clients), but also it called for some behavioral changes in how agents do business. To know more about what the NAR settlement means for home buyers and sellers, click HERE. For more information on the settlement, you can also visit the links listed below:

The NAR Settlement: What Agents Need to Know

NAR Settlement Gains Preliminary Approval 

The above are some of those behavioral changes.

Are you confused? Does all of this sound vague? Consider yourselves in good company. We agents are confused as well. It’s a totally new way of doing business.

Just because the process is becoming more complicated, I don’t think it’s a reason to throw all agents out with the bath water. I still believe in my heart that a good agent will save you more than they cost you and reduce your risk as well. Your goals for the transaction and the consumer’s well being will still be the number one priority. I still think that the majority of the people in this industry are helpful and well meaning.

I think wise buyers and sellers will still hire effective real estate agents to help them achieve their goals in a transaction. That won’t change, either.

Oh yeah – I promised a caveat.

This all might become moot, or radically changed in a few months by another lawsuit that the Department of Justice has brought against the NAR.

Stay tuned.

I also published this in Lake Magazine and the Alabama Center for Real Estate.

Please contact me, John Coley, at the number above if you have any questions relating to this blog or other real estate questions. You can also use our CONTACT PAGE.