How the New NAR Rules Affect Sellers: A Detailed Breakdown
If you’re considering selling your home, you’ve likely heard a lot about the recent National Association of Realtors (NAR) rule changes, particularly following the settlement on August 17th. While much of the discussion has focused on how these changes impact buyers, it’s crucial to understand how sellers are affected as well. In this blog post, we’ll explore what these changes mean for you as a seller, comparing the old way of doing things with the new, and discussing what we’re currently seeing in the market.
Decoupling of Commissions: What Does It Mean for Sellers?
One of the most significant changes is the decoupling of commissions. Previously, when you listed your home, the listing agent would negotiate a total commission that included compensation for both the listing agent and the buyer’s agent. This typically ranged from 5% to 6% of the home’s sale price. However, under the new rules, these negotiations are now separate.
So, what does this mean for you? Essentially, the buyer’s agent must now negotiate their compensation directly with their buyer and then again with the seller when an offer is made. This change shifts the listing agent’s focus from merely obtaining the highest price for your home to helping you achieve the highest net proceeds possible.
The New Listing Structure
In the current market, the listing agent only negotiates their compensation with the seller—there’s no longer an expectation to agree upfront on a commission to pay the buyer’s agent. Instead, the focus is on setting clear expectations from the outset, ensuring that all offers are reviewed with an eye toward achieving your net proceeds goal.
It’s essential to understand that offers from buyer’s agents may still include requests for compensation, typically between 1% and 3%. But under the new structure, this is something that gets addressed during the offer process rather than being predetermined at the time of listing.
Comparing the Old and New Ways
In the old system, you would agree to a total commission when listing your home, which included a portion that would be offered to the buyer’s agent. This was a standard practice because the Multiple Listing Service (MLS) required some form of compensation to be listed to participate. To avoid being seen as discount brokerages, many agents would set this amount at 2% to 3%.
Now, under the new rules, the buyer’s agent includes their compensation request as part of the offer. While the total compensation amounts are often similar to the old way, the structure is different. The listing agent’s compensation is settled at the time of listing, while the buyer’s agent’s compensation is part of the negotiation process when offers are submitted.
What We’re Seeing in the Market
Currently, we’re seeing that this change has not deterred showings or offers on our listings. Despite some concerns that fewer buyers would view properties if a buyer’s agent’s commission isn’t upfront, this hasn’t been the case. Buyers aren’t likely to walk away from a home that meets their needs because of their agent’s compensation—especially when it’s a property they love.
Most homes on the market are still offering some form of compensation, and these homes are still selling. The key question we often receive from buyer’s agents now is, “Are you offering compensation to buyer’s agents?” This question is no different from asking whether a seller would consider a lower offer on a home. Our response is always the same: “Put it in writing, and we’ll present it to the seller.”
Addressing Seller Concerns
If a seller is adamant about not paying a buyer’s agent commission, perhaps because they’ve heard they no longer have to, it’s essential to set the right expectations. It’s unlikely that a seller would want to take a lower net amount just to avoid paying a commission. Instead, we focus on the bottom line—what you will net after the sale.
For example, if you receive an offer of $1,000,000 with a 2% compensation request and another offer of $1,125,000 with a 2.5% request, you’ll choose the one that nets you the most. The exact compensation doesn’t matter as long as your net proceeds are maximized.
The new NAR rules have introduced some changes in how commissions are handled, but they haven’t deterred buyers or sellers. The key takeaway is that all offers are negotiable, and the goal remains to help you, as the seller, achieve the highest net proceeds possible. If you have any questions or need further clarification, please don’t hesitate to reach out at (818) 396-3311. We’re here to help you navigate these changes and ensure you have a successful home-selling experience.
