Starting August 17, 2024, significant changes will take effect in the real estate industry, impacting how home buyers work with agents and how commissions are handled. These changes stem from a recent settlement involving the National Association of Realtors (NAR) and aim to increase transparency and empower buyers in their transactions.
New Requirement: Signed Contracts Before Home Viewings
One of the major changes is that real estate agents affiliated with the NAR will now require buyers to sign a contract before showing any homes. Traditionally, buyers would contact an agent and begin viewing properties without formal agreements. The new rule mandates a written agreement outlining the terms of the relationship, including compensation details. Think of it like choosing a car salesperson before taking a test drive.
This contractual agreement is intended to clarify expectations and ensure transparency regarding how agents are compensated. Buyers should carefully review these contracts and seek legal advice if necessary. It's crucial to find a reputable and experienced agent who can guide you through the entire process and discuss payment arrangements openly.
Commission Transparency Changes
Another significant change is the removal of commission information from the Multiple Listing Service (MLS). Previously, the seller would typically pay a 6% commission, split between the listing agent and the buyer's agent. With the new rules, only the commission for the listing agent will be displayed. This means buyers may need to pay their agent's commission, which could add to the cost of purchasing a home.
This shift could present challenges, especially as buyers navigate the affordability of paying for their own representation. However, it also opens the door for negotiation. Buyers now have the opportunity to discuss commission rates with their agents and potentially lower them. While this new system may seem daunting, it provides a chance for more personalized and flexible arrangements.
Navigating the Changes
The changes brought by the NAR settlement are designed to increase transparency and fairness in real estate transactions. While they may initially slow down the buying process as everyone adapts, they also encourage more informed and deliberate decision-making.
At Armenta Realty, we are committed to guiding our clients through these new requirements. Ready to take the next step to homeownership? Armenta Realty offers nationwide lending and buying/listing services in Southern California and Southern Arizona.
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