Hey everyone, it’s Scott Himelstein with the Scott Himelstein Group, and today we’re diving into some major changes happening in the real estate world on August 17th. These changes will impact both buyers and sellers, so let’s break it down and discuss what’s happening, how it affects you, and how to navigate this new landscape.
For some context, back in March, the National Association of Realtors (NAR) reached a settlement agreement in two major cases: the Sitzer-Burnett and Murrow cases. These cases challenged the way real estate commissions are structured, and as a result, the NAR agreed to a settlement of $418 million. One key outcome of this settlement is the elimination of some commission rules that have been in place for a long time.
Up until now, sellers typically paid both the listing agent and the buyer’s agent from the total sales price. This commission was usually split between the two agents—if it was 6%, the listing agent would get 3%, and the buyer’s agent would get the other 3%. But after August 17th, sellers no longer have to pay the buyer’s agent. Instead, sellers can choose to only compensate their listing agent, or they can decide to offer a concession to the buyer’s agent if they wish. The choice is theirs, but they are no longer obligated to cover both agents’ fees.
As you can imagine, this has created a lot of concern among buyers. With the current high interest rates and the already challenging process of buying a home, this change means buyers will now be responsible for compensating their own agents. It’s another cost on top of down payments, closing costs, and all the other expenses that come with purchasing a home.
So, what should you do if you’re planning to buy a home after August 17th? First, you’ll be required to sign a buyer’s agency agreement with your agent. This agreement will outline the compensation you’ll provide to your agent, whether it’s a flat fee or a percentage of the sales price. It’s important to negotiate this with your agent upfront, so you both have a clear understanding of the costs involved.
If you’re in the market to buy, I recommend interviewing at least three agents and asking them key questions about their services and fees. What will they do to help you through the process? Are they handling everything from paperwork to inspections, or are you expected to do some of the work yourself? Transparency is key here—you want to know exactly what you’re paying for.
A common question we get is, “What if I only want to see one specific property and don’t want to commit to a full buyer’s agency agreement?” In that case, you can sign a one-day agreement with an agent, allowing you to test out their services. If you like working with them, you can always sign a longer agreement later.
There’s also been some confusion about open houses. You don’t need a buyer’s agency agreement just to attend an open house. However, when you’re ready to move forward on a property, you’ll need to make decisions about representation. This could involve signing a non-agency disclosure or a limited representation agreement, depending on your comfort level and needs.
One final note: after August 17th, buyer compensation or commissions will no longer be displayed in the MLS. This is to prevent steering, where agents might guide clients away from properties based on commission rates.
If you’re feeling overwhelmed by these changes, don’t worry. You can always negotiate with the seller to help cover your agent’s fees, but be prepared for the possibility that you might have to cover the costs yourself.
That’s a wrap for today! If you have any questions, drop them in the comments below, or reach out directly. I’m here to help you navigate these changes and ensure you’re making the best decisions for your real estate journey. Thanks for watching, and I’ll see you in the next video!
