Upcoming Changes in Real Estate: What You Need to Know

As we head into August, significant changes are on the horizon for home buyers in the U.S. The real estate landscape is about to undergo a transformation that could alter the way buyers interact with agents and handle commissions. Here's a breakdown of what you need to know and how it might impact your next home purchase.

A New Era in Real Estate

Starting August 17, the real estate industry will implement changes resulting from a $418 million nationwide settlement involving the National Association of Realtors (NAR), several brokerages, and a group of home sellers. The settlement comes after a lawsuit where the plaintiffs accused the NAR and certain brokerages of colluding to inflate real estate commissions artificially. The jury sided with the plaintiffs, leading to this landmark settlement, which is seen by many as the most significant change to real estate in over a century.

Key Changes to Expect

Two major changes will take effect on August 17:

1. Buyer-Agent Contracts: Real estate agents affiliated with the NAR will now require buyers to sign contracts before showing them any properties. These contracts will outline the terms of the buyer-agent relationship, including how the agent will be compensated.

2. Transparency in Commissions: The Multiple Listing Service (MLS), which lists homes for sale, will no longer display the commission that a buyer's agent would receive if they sell a house. This move aims to encourage more transparent negotiations between buyers and agents.

How These Changes Impact You

For many buyers, this new process might initially seem confusing. Previously, buyers could casually contact agents to view homes without any formal agreements. Now, they must sign a contract that details the agent's compensation, which could range from a flat fee to a percentage of the home's sale price. This shift places a greater responsibility on buyers to understand the terms they're agreeing to and to choose their agents carefully.

In the past, sellers typically paid a commission fee (usually around 5-6%) that was split between the seller's and buyer's agents. Under the new rules, sellers can pay only the agent representing them, if they so choose. This change means buyers may need to pay their agents' fees, which could add thousands of dollars to their costs. In my next blog post I will go into detail on why I feel it is still important to offer a buyer's agent commission when listing your home.

Navigating the New Market

As a buyer, it's crucial to approach this new landscape with a clear understanding of your rights and options. You are encouraged to:

• Thoroughly Review Contracts: Ensure you understand the terms before signing any agreements. If the contract terms are unclear or seem unfair, seek clarification or consult a real estate attorney.

• Negotiate Agent Fees: The new rules provide an opportunity to negotiate commissions. Don't hesitate to discuss and negotiate fees with your agent to ensure they align with the value of the service they provide.

• Choose Your Agent Wisely: Select a reputable and experienced agent who can guide you through the entire process and have transparent conversations about compensation.

The Bigger Picture

While the immediate impact may cause confusion, experts believe these changes will ultimately benefit consumers by increasing price competition and lowering overall commission rates. However, the transition period could be challenging as both buyers and agents adjust to the new norms.

As the industry adapts, it's essential to stay informed and make educated decisions when buying a home. The upcoming changes represent a shift toward a more transparent and equitable real estate market, where consumers have more control and clarity over the services they receive and the costs they incur.

Stay tuned for more updates and insights as these changes take effect, and feel free to contact me with any questions about how this may impact your real estate journey. 

More information:

Home sellers

Home buyers 

Krystal Casey, Realtor
Keller Williams Realty
Krystal@delawarebeachomes.com
www.delawarebeachomes.com
C: 302-604-4683 |  O: 302-360-0300