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The rules of buying and selling a home in California have totally changed after historic

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A “Sale Pending” sign hangs in front of a property in San Francisco in 2023. Last Saturday, the National Association of Realtors introduced policies that changed the payment process for real estate agents representing home buyers. 

Jeff Chiu/Associated Press

There’s been a major shake-up in how you buy and sell your home in America — and those in the Bay Area’s ultra-pricey and ultracompetitive housing market are watching closely to see how these changes might affect them.

This past Saturday, the National Association of Realtors implemented new policies that affect how real estate agents get paid when they represent a home buyer.

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Previously, in the vast majority of real estate transactions, the seller covered the commission fees for both the seller’s agent and the buyer’s agent. That commission percentage was baked into the price of the house. When homes were listed on the real estate database called the Multiple Listing Service, agents could see what percentage commission they would get if someone they represented bought the home.

For the buyer, their real estate agent’s services were “free,” in that they did not pay the agent out of pocket during the transaction.

A lawsuit upended this longtime practice. A group of home sellers in Missouri argued in a class action lawsuit that the practice violated antitrust laws. So the National Association of Realtors, a trade association that represents real estate agents and brokers, agreed to a settlement that changed the rules.

Those changes represent “the biggest shake-up to real estate in the United States in the past 200 years,” said Nikki Edwards, a real estate agent in the Bay Area. 

But in Northern California’s tight markets, she said she doesn’t see the changes “being a factor that’s going to move the needle in terms of dropping prices dramatically to even affordable levels.”

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If you’re planning to buy or sell a home in the near future, the process is going to be different. Here’s what to expect.

Changes for buyers

How it worked before: A real estate agent could show a potential buyer a house without establishing any sort of contract between the parties. Buyers had no say in what commission the agent would receive if they bought a house. 

Though the buyer’s agent was not working “for free,” said Vanessa Gamp, the president of the San Francisco Association of Realtors, “the buyer was not paying up front for the services. The agent was being paid through the shared listing agents’ commission” via the seller from the proceeds from the home sale.

How it works now: A buyer will need to enter into a written agreement stating how their real estate agent will get paid before the agent can show them a house. 

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Vince Malta, the former president of the National Association of Realtors and a real estate agent in San Francisco, outlined what the agreement must contain.

“The relationship and how compensation is going to be paid, how the agent will be compensated, what the rate will be — is it a fee, a percentage, something else — and it will include a statement that the agent will not receive compensation from any source other than what they’ve agreed to in this written agreement,” Malta said. The agent and buyer will also agree on the duration of the contract. It could be for a few months or longer, or it could just cover one house showing.

So buyers now have the opportunity to decide what they think their agent’s time is worth. Buyers can negotiate the traditional percentage commission on the purchase price or negotiate a flat fee, an hourly rate or some other arrangement. The realtor can agree to that or not.

This change doesn’t necessarily mean buyers will have to pay their agent’s fees out of pocket and up front — or at all. Sellers are still allowed to fold the buyer’s agent’s commission into the purchase price. They just aren’t agreeing to do that up front like they used to.

It’s too early to tell whether nontraditional payment arrangements will become popular: The rules only went into effect this past Saturday. So far, Gamp said, she hasn’t been approached by any buyers seeking an alternative style of payment. And none of the real estate agents interviewed for this story said they’ve heard from sellers who say they won’t agree to the traditional method of baking the commission into the sale price.

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So-called discount agents already exist — websites and platforms that will draw up an offer letter for a flat fee — and they might become more popular, Gamp said. But a competitive real estate agent who can pick and choose clients probably won’t take one trying to get a bargain.

“San Francisco’s a really sophisticated, complicated market. And most agents that are out here selling real estate for a living are putting in a ton of time and effort,” she said. “In order to be successful, you’re typically working with an agent that does this full time, and those agents want to be paid appropriately for the work that they’re doing.”

Changes for sellers

How it worked before: In most cases, the seller agreed to pay their agent and the buyer’s agent before the house was listed on MLS. That agreement often involved a cooperating commission amount based on the purchase price of the house — typically 5%-6%, though that percentage was always negotiable — and split between the two agents. That commission was listed on MLS, so other real estate agents could anticipate what they’d make on a sale.

How it works now: The seller is not required to agree up front to cover the buyer’s agent costs. Any commission that might be offered to a buyer’s agent will not be listed on MLS.

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Buyers will have the option to make an offer that includes a percentage they intend for the seller to pay as commission to their agent. A seller can agree to that — and has good incentive to, Gamp said. Limiting your potential buyer pool to people who can pay their agent out of pocket in addition to their down payment means you might get fewer offers or fewer competitive ones, especially in a market like San Francisco that’s already so pricey.

“A buyer is going to have a finite budget no matter what,” Gamp said. “So if they are also required to pay commission, that means they will have less of a budget for the purchase.”

What about open houses?

The new policy change doesn’t extend to open houses. You can still casually drop in to one without having to sign a contract under the new NAR rules. A listing agent might ask you to sign something before you see an open house. But they are not required to under the NAR settlement rules.

“That is the one carve-out the NAR made very clear,” Gamp said. There was some confusion about this at first, she said, but “public open houses is the one scenario where a buyer would not need to have a signed agreement in order to see the property.”

Will this change bring down home prices?

When the settlement was announced, some industry watchers predicted it would bring down prices by putting buyers in the driver’s seat when it comes to how their agents were compensated. Buyers could negotiate a flat fee or lower percentage payout. Or the changes could reduce competition for homes by removing casual shoppers from the market who are wary of signing a binding agreement up front.

But buyers have very little leverage to begin with in California’s super tight market, and they have lots of competition. Malta said he doesn’t see these changes moving the needle.

“I think it’s really speculative to say this is going to affect home prices,” he said. “There are greater market conditions such as inventory and mortgage interest rates that are much bigger factors.”

If anything, it could make things harder for buyers, Edwards said.

“If you’re placing an offer, and if now we’re competing with other people and we don’t know what they’re offering in terms of commission now, we don’t really know how that seller’s going to look at the offers,” she said. 

Ultimately, buyers will have more transparency into pricing with their agent. But the changes add a layer of paperwork and complexity to a process that was already notorious for both of those things.

Reach Jessica Roy: jessica.roy@sfchronicle.com



This article was originally published by a www.sfchronicle.com . Read the Original article here. .

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11 Area Rug Rules and How to Break Them

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I often get asked, “What are the rules in selecting the size of rug to use in a room?” Deciding what size rug is best for a space can be hard since there are many “rules” and just as many opposing opinions.

One popular rule is that the rug should be large enough to slide under the front legs of sofas and chairs in a seating arrangement, unifying the furniture. But just as frequently I’ve heard it suggested that all legs of the furniture should sit on the rug. So, rather than be bound by rules, be aware of the following guidelines and let them assist you in determining what size rug provides the visual effect you desire in the rooms of your house.



This article was originally published by a www.houzz.com . Read the Original article here. .

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New real estate rules are in effect: Here’s what you need 2 know

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A class action suit has resulted in new buying and selling rules aimed at making the real estate process more transparent.

BUFFALO, N.Y. — Those in the market for buying or selling a home, are facing some changes in the process due to a national settlement that called for more transparency in the real estate process.

The newest rules laid out by the National Association of Realtors are as follows:

Offers of compensation will be prohibited on Multiple Listing Services (MLSs). Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.Agents working with a buyer must enter into a written buyer agreement before the buyer can tour a home. The practice changes do not require an agency agreement or dictate any type of relationship.

Gregory Straus of 716 Realty Group says that although the written agreement is a new requirement, it’s not a foreign concept.

“Before it was optional, now it is required that when a buyer goes out and tours a home that they have buyer broker agreement which clarifies that they’re working with a realtor and that conversations had upfront and the fee that an agent can earn is also clearly identified in that contract,” said Straus. 

Real estate professionals in Western New York say that this allows for transactional transparency.

“This is improving the industry so that we have those conversations up front, what does it mean to be helping you, how much are we going to be paid, are we all transparent about that and that’s the goal of the settlement,” said Straus. 

That goal of transparency was also echoed by Vienna Laurendi, President of the Buffalo Niagara Association of Realtors.

“Honestly, this has always been in place, it’s just never been talked about out loud. So that’s where we come in with some transparency in the transaction,” said Laurendi. 

Really, it makes agents commission more negotiable for the buyer and the seller. Although the rules may sound different, it’s more of a matter of paperwork, making realtors adjust for the consumer – not the other way around. 

“The transactions are going to be a lot easier thanks to the dialogue that we are now armed and faced with,” says, Laurendi. 



This article was originally published by a www.wgrz.com . Read the Original article here. .

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New real estate rules for selling homes take effect

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MetroCreative

New real estate rules for homebuyers and sellers went into effect last weekend.

The rules, which impact the way commissions work, stem from a $418 million settlement between the National Association of Realtors and home sellers earlier this year.

The federal class-action lawsuits claimed that homeowners were being forced to pay artificially inflated real estate commissions when they sold their homes.

The rules boil down to two significant changes.

First, under the new rules, homes listed on a Multiple Listing Service, or MLS, will no longer include a seller’s offer to cover the cost of a buyer’s agent’s services.

“That’s the biggest change for us in Western Pennsylvania. Now, we are not allowed to advertise the buyer’s agent’s commission in the MLS,” said Scott Cavinee, a real estate agent for SWC Realty in Uniontown.

A seller can still allow a commission split, but the agreement cannot be listed on the MLS.

Second, home buyers who want to work with an agent will have to sign an agreement up front that details exactly what commission the buyer will pay the agent – including whether it’s through a commission split with a seller’s agent – before working together or touring homes in person or virtually with their agent.

That’s not entirely new, said Beverly A. Herndon, president of the Washington-Greene Association of Realtors, as about a dozen states already required those written agreements.

“Pennsylvania has had a buyer agency agreement since 1999 – we’ve been doing it for about 25 years – so nothing in regard to that should change,” said Herndon.

Traditionally, an agent for a person selling a home would typically take a 5 or 6% commission on a home sale. It was intended to be shared with the buyer’s agent and was considered a standard, if informal, practice.

Armand Ferrara, a real estate agent with SWC Realty in Belle Vernon, noted commission has always been negotiable.

“Commission has always been negotiable,” he said. “Let’s say I’m going to list your house and I’m going to list for 6% commission, but we want to give the buyer agent a part of that commission, maybe 3%. You might say, ‘I don’t want to give the buyer agent anything and I don’t want to give you 6%. Commission is optional; that’s not new.”

Cavinee said sellers should be aware that buyers can still ask the seller to pay some, or all of the fees of their agent.

“If the only offer coming in is a buyer who asks for the seller to cover “X” percent, the seller will do it if he wants to sell that house,” said Cavinee. “It’s like saying, ‘Will you leave that living room suit?’ It’s part of the negotiations.”

If a seller doesn’t agree to pay the buyer’s agent, the buyer is responsible for it, which can impact first-time and low-income buyers who might not have a lot of cash, Cavinee said.

Herndon said it’s important to have a trusted, licensed agent to navigate the complicated process of purchasing or selling a home, which is often the biggest financial purchase a person will make.

Kim Shindle, vice president of communications for the Pennsylvania Association of Realtors, agreed.

“It’s important for home buyers or those selling their homes to understand the important role Realtors play guiding them through home buying or home selling,” she said. “They lend their knowledge about the local marketplace, where each area is different.”

Herndon said it’s too soon to tell what impact the changes will have, but said ultimately, the purpose is to provide transparency “so the consumer is fully informed as to what is required on both sides.”



This article was originally published by a www.observer-reporter.com . Read the Original article here. .

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Maryland real estate agents, homebuyers navigate changes under new rules – Maryland Matters

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For more than a century, when someone wanted to buy a home all they had to do was walk into a real estate office and ask the agent to start showing them properties. That agent was typically paid by the seller if a deal ever went through.

All that changed Saturday.

As part of the settlement of an antitrust lawsuit brought by home sellers, the National Association of Realtors (NAR) agreed that sellers’ agents can no longer include an upfront offer of compensation to the buyer’s agent in order to list a property on the Multiple Listing Service.

As a result, buyers may find themselves having to strike a deal with their agents to pay them for work that used to be covered automatically by the seller, negotiating a price with their agent before even looking at a property.

It’s a change that agents said they have spent months preparing for. But that doesn’t mean they’re crazy about it.

“The buyer and the tenant are the ones at … risk of losing the most, due to the fact that they may not be able to obtain or afford proper representation,” said Gregory Gray, a real estate agent based in Howard County. “It tilts the scale in favor of the seller.”

But the change was defended by NAR President Kevin Sears, who said in a written statement last week that the changes “help to further empower consumers with clarity and choice when buying and selling a home.”

“As the August 17 practice change implementation date approaches, I am confident in our members’ abilities to prepare for and embrace this evolution of our industry,” his statement said.

The lawsuit against NAR claimed that its previous rules were anticompetitive. Under those rules, sellers had to include an offer of compensation for buyers’ agents if they wanted their home to show up in the MLS, the association’s listing of properties for sale.

Under the settlement announced in March, NAR now prohibits such offers in an MLS listing. While buyers and sellers could later negotiate some payment, it’s not set in advance, leaving buyers to pay their agents’ fee.

The shift could be less painful in Maryland, which has required written buyer agreements since 2016, said Maryland Association of Realtors CEO Chuck Kasky. But the new written agreements must disclose the amount or rate of compensation of a buyer agent, Kasky said in a resource video explaining the change.

“Real estate licensees will be required to enter into written agreements with buyers before touring a home. This applies to houses listed on a multiple listing service,” Kasky explained. 

Judith Egbarin, the owner of Blue Ribbon Realty, said that under the new arrangement will hit buyers the hardest. 

“They want the buyers to pay commission to their own agents, so who’s going to lose out the most?” Egbarin asked. She answered her own question by noting that “the buyer now has to come out of pocket even more.”

She said this will add to the fees that the buyer traditionally has to pay, like down payments and closing costs. 

Jennifer Young, from Jennifer Young Realty, agreed with Egbarin. Young said the new settlement would most negatively affect first-time home buyers. 

“I don’t think it’s a good thing. So I think it’s going to hurt buyers who are no-money-down, low-money-down buyers, first-time buyers, grant program buyers,” Young said. “So there’s potentially more cost to have proper representation.” 

But none of the agents felt defeated by the settlement and, in fact, all were looking ahead. Young said her firm had been preparing its agents for months before Saturday’s shift and Gray said that the settlement will leave a competitive landscape for buyers’ agents. 

“It’s going to be very competitive, and they’re going to have to show their value if they want to obtain the commission,” Gray said. “They’re not getting it from the seller or the landlord, they’re going to have to get it from their client, and they’re going to have to be able to negotiate.”

Egbarin said that real estate will just have to adapt and adjust.

“It’s just, we need to get used to it. And we will adjust,” she said. “I’m not frustrated yet, I am very optimistic, I want to see what happens.”

– This story was updated on Monday, Aug. 19, to correct Chuck Kasky’s title in the 10th paragraph and to clarify the effect of the NAR settlement throughout.



This article was originally published by a marylandmatters.org . Read the Original article here. .

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Palm Beach County real estate agent says new home buying/selling rules could present issues

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NEW RULES FOR HOW MOST REAL ESTATE PROFESSIONALS SELL PROPERTY JUST TOOK EFFECT. THAT MEANS THERE ARE SOME CHANGES YOU NEED TO KNOW ABOUT ABOUT THE PROCESS. STEVE KING JOINS US LIVE WITH THE CONCERNS THAT A PALM BEACH COUNTY REAL ESTATE AGENT IS EXPRESSING FOR HOME BUYERS. AS WE MOVE FORWARD. STEVE. TODD. THESE NEW RULES WENT INTO EFFECT AS A RESULT OF A $418 MILLION ANTITRUST LAWSUIT SETTLEMENT. NOW, PEOPLE WHO ARE GOING TO TOUR A HOME NEED TO SIGN A LEGAL DOCUMENT BEFORE THEY COULD GO ON THAT HOME TOUR WITH THEIR REAL ESTATE AGENT. GARY PORTER WITH DOUGLAS ELLIMAN, REAL ESTATE IN PALM BEACH, SAYS THIS COULD CREATE PROBLEMS FOR BUYERS. I WOULD SAY THEY’RE JUST GOING TO BE CONFUSED. I THINK THAT BUYERS WILL BE WALKING INTO AN OPEN HOUSE, AND FOR ME TO EVEN SHOW YOU THE HOME, I BELIEVE YOU HAVE TO SIGN ONE OF THESE DOCUMENTS. SO I THINK BUYERS ARE JUST GOING TO KIND OF BE A LITTLE BIT HESITANT TO LOOK AT THESE THREE NEW DOCUMENTS. MOST PEOPLE DON’T WANT TO SIGN THINGS, ESPECIALLY LEGAL LOOKING DOCUMENTS, WHEN THEY DON’T EVEN KNOW THAT PERSON. PORTER SAY ONE OF THE DOCUMENTS REQUIRES THE HOME BUYER TO AGREE TO WORK WITH THE REAL ESTATE AGENT FOR A SET PERIOD OF TIME, WHILE ANOTHER ONLY COMMITS TO SHOWINGS FOR CERTAIN PROPERTIES WITH THAT REAL ESTATE AGENT. IT GOES FROM MORE COMMITTED TO MODERATELY COMMITTED TO NOT REALLY COMMITTED AT ALL. ALL THE DOCUMENTS ALSO CAN BE MODIFIED SO IF YOU SAID YOU WANTED TO GO LOOK AT HOUSES WITH ME AND DECIDED TOMORROW YOU DIDN’T WANT TO SEE THEM OR DIDN’T WANT TO BUY ANYTHING, THEN YOU JUST BASICALLY SAY, GARY, YOU KNOW WHAT? PLEASE CANCEL THAT AGREEMENT AND WE’LL HAVE TO RESIGN AND JUST CANCEL IT. AS FOR THE MULTIPLE LISTING SERVICE, IT’S PLATFORMS NO LONGER HAVE FIELDS FOR REAL ESTATE BROKER COMPENSATION LISTED LIKE BEFORE. I HONESTLY DON’T SEE IT REALLY HELPING ANYBODY. ASIDE FROM THE LAWYERS THAT SETTLED THE LAWSUIT. I MEAN, IF YOU ARE A HOME BUYER LOOKING FOR A HOME, BUT YOU’RE UNWILLING TO PAY A BROKER AND THE SELLER IS UNWILLING TO PAY THE FEE TO THE BROKER, THE A REALTOR MOST LIKELY WON’T SHOW YOU AROUND. AND FOR MORE ON THE NEW NATIONAL ASSOCIATION OF REALTORS RULES, YOU CAN VISIT OUR WPBF 25 NEWS APP. REPORTING LIVE

Palm Beach County real estate agent says new home buying/selling rules could present problems

New regulations are now in place for real estate professionals, and a Palm Beach County real estate agent says it could cause issues for home buyers moving forward.The changes follow a $418 million antitrust settlement.Now, homebuyers must sign a legally binding agreement with their real estate agent before touring a home with that agent.Gary Pohrer, a veteran real estate agent with Douglas Elliman Palm Beach, says he has concerns about the new regulations. “I would say (homebuyers are) just going to be confused,” Pohrer said. “I think that buyers will be walking into an open house, and for me to even show you the home, you’ll have to sign one of these documents, so I think buyers are going to be a little bit hesitant to look at these three new documents. Most people don’t want to sign things, especially legal-looking documents, when they don’t even know that person.”One of the documents requires the home buyer to agree to work with the real estate agent for a set period of time, while another only commits to showings for certain properties with that real estate agent. “It goes from more committed to moderately committed to not really committed at all,” Pohrer said. “All of the documents also can be modified, so if you want to go look at houses with me and decide tomorrow, you didn’t want to see them or didn’t want to buy anything, then you just basically say, ‘Gary, you know what? Please cancel that agreement,’ and we’ll have to resign and just cancel it.”Additionally, the Multiple Listing Service platforms have undergone changes, removing fields that previously listed compensation totals for real estate brokers, both sellers and buyers.”I honestly don’t see it really helping anybody,” Pohrer said. “Aside from the lawyers that settled the lawsuit. I mean, if you are a home buyer looking for a home, but you’re unwilling to pay a broker, and the seller is unwilling to pay the fee to the broker, then a realtor most likely won’t show you around.”For more information about the new rules, click here.Stay up-to-date: The latest headlines and weather from WPBF 25 Get the latest news updates with the WPBF 25 News app. You can download it here.

PALM BEACH COUNTY, Fla. —

New regulations are now in place for real estate professionals, and a Palm Beach County real estate agent says it could cause issues for home buyers moving forward.

The changes follow a $418 million antitrust settlement.

Now, homebuyers must sign a legally binding agreement with their real estate agent before touring a home with that agent.

Gary Pohrer, a veteran real estate agent with Douglas Elliman Palm Beach, says he has concerns about the new regulations.

“I would say (homebuyers are) just going to be confused,” Pohrer said. “I think that buyers will be walking into an open house, and for me to even show you the home, you’ll have to sign one of these documents, so I think buyers are going to be a little bit hesitant to look at these three new documents. Most people don’t want to sign things, especially legal-looking documents, when they don’t even know that person.”

One of the documents requires the home buyer to agree to work with the real estate agent for a set period of time, while another only commits to showings for certain properties with that real estate agent.

“It goes from more committed to moderately committed to not really committed at all,” Pohrer said. “All of the documents also can be modified, so if you want to go look at houses with me and decide tomorrow, you didn’t want to see them or didn’t want to buy anything, then you just basically say, ‘Gary, you know what? Please cancel that agreement,’ and we’ll have to resign and just cancel it.”

Additionally, the Multiple Listing Service platforms have undergone changes, removing fields that previously listed compensation totals for real estate brokers, both sellers and buyers.

“I honestly don’t see it really helping anybody,” Pohrer said. “Aside from the lawyers that settled the lawsuit. I mean, if you are a home buyer looking for a home, but you’re unwilling to pay a broker, and the seller is unwilling to pay the fee to the broker, then a realtor most likely won’t show you around.”

For more information about the new rules, click here.

Stay up-to-date: The latest headlines and weather from WPBF 25

Get the latest news updates with the WPBF 25 News app. You can download it here.



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Homebuyers to see biggest impact from new real estate rules | Finance & Commerce

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LOS ANGELES — Thinking of buying a home with the help of a real estate agent? You can no longer take it for granted that a seller will cover the cost of your agent’s commission.

Home sellers have traditionally offered a blanket commission to a buyer’s agent when they listed their home on the market. But that will no longer be allowed as of this weekend, when various changes to U.S. real estate industry practices are set to take effect.

A homebuyer may still try to negotiate such an offer from the seller. But if they decline, that would leave the homebuyer on the hook for paying for their agent’s services.

The National Association of Realtors is behind the policy changes, which stem from its $418 million settlement earlier this year of federal class-action lawsuits that claimed U.S. homeowners were forced to pay artificially inflated real estate agent commissions when they sold their home.

Companies behind several major real estate brokerage brands, including Keller Williams, Anywhere Real Estate, HomeServices of America, Re/Max and Redfin, also agreed to pay millions and make policy changes to make home seller lawsuits go away.

The new rules, which go into effect nationally on Saturday, apply to brokers and agents representing clients looking to buy or sell a home advertised on a multiple listing service, or MLS, affiliated with the NAR.

They boil down to two significant changes: Blanket offers of compensation on behalf of sellers to buyers’ agents will no longer be included in listings posted on the MLS, though they can still be made through other means. And homebuyers will be required to sign detailed representation agreements when they hire an agent.

It remains to be seen whether the policy overhaul will lead to lower agent commissions or fewer sellers opting not to offer to cover the buyer’s agent fees.

But the changes are likely to have the biggest impact on home shoppers — especially first-time buyers already facing elevated mortgage rates, a shortage of properties on the market and record-high home prices. They will now have to factor in the cost of hiring an agent if a seller isn’t willing to cover it.

“This will have a negative impact on a buyer’s ability to purchase a home, and so there are going to be quite a few large-scale changes in the buyer’s process,” said Bret Weinstein, CEO of Guide Real Estate, a brokerage in Denver.

Homebuyer representation agreements

Home shoppers who want to work with an agent will have to sign an agreement upfront that details the services that agent will provide and how much they will be paid, including whether it’s through a commission split with a seller’s agent.

Generally, an agent who represents a buyer typically receives around 2.5%-3% commission based on the purchase price of the home. Agents then share part of their commission with their brokerage.

Similar buyer representation agreements are already required in roughly 20 states. However, the new rules require that buyer agreements be completed before an agent begins working on a client’s behalf. That includes before the agent takes a buyer to tour a home, whether in person or virtually. A buyer can still go to an open house without signing a representation agreement.

“The big change now is that we are required to ask the buyer to commit to us early and hire us early in the process,” said Andrea Ratcliff, a Redfin agent in Indianapolis, where the policy changes were rolled out July 1.

One home shopper she spoke with was put off by the changes and the prospect of covering an agent’s fees, she said.

“They definitely weren’t ready to commit to me — weren’t ready commit to any agent, because they weren’t prepared to take on that cost,” Ratcliff said.

Removing buyer-agent compensation offers from home listings

Traditionally, a buyer’s agent’s commission has been paid by the seller. Agents who work with homeowners to market and sell their home would list the property on an MLS and include how much their client was offering to pay a buyer’s agent, a practice known as an offer of “cooperative compensation.” That’s when a seller agrees in advance to offer a commission on the sale of their home to be split between their agent and the buyer’s representative, typically around 2.5%-3% each.

The home sellers behind the lawsuits against the NAR and others argued sellers have had little choice but to offer to cover the buyer’s agent’s compensation in order to ensure their listing was shown to as many prospective buyers as possible.

To address this, homes listed on an MLS will no longer include a seller’s offer to cover the cost of a buyer’s agent’s services. However, they will still be allowed to advertise them practically anywhere else, including the agent’s own website, a display at an open house, or when communicating directly with an agent representing a prospective homebuyer.

Sellers may still elect to pay for a buyer’s agent’s compensation, but without the pressure of making a public, blanket offer on the MLS. Some may opt to pocket the savings and only cover their own agent’s commission.

“If there’s not a clear offer of cooperative compensation from the seller through their broker to the buyer’s broker, then yeah, it’s going to be part of [the] negotiation,” said Kevin Sears, president of the National Association of Realtors. “I think that will be something that we see changing in the marketplace.”

Where does this leave buyers and sellers?

Much of how the industry policy changes play out for buyers and sellers will depend largely on the state of the local housing market.

In a sluggish housing market where homes are taking longer to move and sellers are having to lower prices, it’s more likely that a buyer will be able to negotiate for the seller to cover their agent’s commission. In a hotter market, where properties are selling fast and receiving multiple offers, sellers will have the leverage to accept an offer from a buyer who isn’t asking for them to cover their agent’s fees.

While sales of previously occupied U.S. homes have been in a slump since 2022, years of underbuilding and other factors have kept the inventory of homes for sale at near all-time lows. That’s pushed up prices and fueled multiple offers for many homes, giving a clear edge to sellers in most markets.

Still, real estate agents say sellers should keep offering to cover the buyer’s agent commission.

“We’ve advised that it would be wise for sellers to continue to be open to covering some or all of the buyer’s costs, because the last thing you want to do when you are selling something is to make it complicated for someone to buy it or to limit the number of people who can buy it,” said Alex McEwen, associate broker with Selling Utah in Orem, Utah.

As for homebuyers, they will have to budget for the possibility that a seller won’t cover their agent’s fees. Those who can’t afford to do so may have to come to an arrangement with their agent to only pursue listings where the seller is offering buyer’s agent compensation.

Will commissions come down?

It’s unclear whether the policy changes will spur sellers or buyers to negotiate lower broker commissions, and whether they’ll succeed if they do.

Buyer-agent commissions have eased somewhat this year: The average buyer’s agent commission fell nationally from 2.62% at the beginning of the year to 2.55% through July 14, according to an analysis by Redfin. However, because home prices have kept rising this year, the average commission paid to a buyer’s agent in dollar terms has risen about 1.7% since January to $15,377.

Stephen Brobeck, senior fellow at Consumer Federation of America, expects that more sellers will be encouraged to negotiate with their agent to lower their commission by at least half a percentage point.

“That represents, over the course of a year in the housing market, a very large sum of money,” he said.



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Rules for buying and selling a home are changing. Here’s what to know.

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When it comes to buying and selling homes, new rules are about to be put in play, five months after the National Association of Realtors agreed to a blockbuster settlement over how its 1.5 million agents across the U.S. are paid commissions.

The settlement — which resolved litigation stemming from a grand jury finding that the real estate group artificially inflated brokerage commissions — brings sweeping changes to the industry, starting tomorrow.

The adjustments come as prospects brighten for the beleaguered housing market. Mortgage rates earlier this month tumbled to their lowest level since April 2023, offering hope to house hunters priced out of the market given high borrowing costs and home prices that reached a record in June. 

Still, the current rate on the 30-year fixed loan stands at about 6.5%, or more than double the sub-3% rates available in 2020 and 2021. The Federal Reserve in September is widely expected to reduce its benchmark interest rate, a step that should reduce mortgage rates currently high enough to bring turnover in the housing market near 40-year lows. 

In the meantime, real estate agents across the nation will have to adopt to new changes that could potentially reduce the commission that home sellers are asked to pay. 

Many experts are now looking for home prices to fall as the sticker price will no longer include the steep commissions that have for decades been in play.

Here’s a rundown of what this means for those looking to buy and sell homes going forward.

Buyers beware

Real estate agents are now required to have buyers sign a form before showing them a home. The agreements are intended to detail exactly how much a buyer will be expected to pay an agent. 

However, “at that stage, the buyer hasn’t had an adequate opportunity to evaluate that agent,” Steve Brobeck, a senior fellow at the Consumer Federation of America, told CBS MoneyWatch. “When you’re touring houses with an agent, the agent is auditioning to be your agent, that’s when you get to know the agent.”

Most buyers would not be comfortable signing a contract with a financial obligation that early in the process, added Brobeck, who noted that the new requirement came at the industry’s behest and was not part of the NAR’s settlement.

Buyers should not sign a contract with a financial obligation until they are ready to make an offer, advises Brobeck. “There are other options for seeing a house,” he noted, including calling the listing agent or attending an open house. 

Another option that is increasingly in use are touring agreements that cover limited amounts of time and come without financial ties, he said, noting that Zillow had developed one. Many model contracts developed by the industry are difficult to read, understand and are otherwise problematic for consumers, Brobeck warns. 

That said, one buyer-broker agreement developed by real estate brokerage eXp Realty is “simple, consumer-centric and meets most of our criteria,” he said. “They’ve made it available for the industry to use.”

Homebuyers should also think about offering a flat fee or paying their agent an hourly rate, the advocacy group advised.

“The dollar value of today’s percentage commissions is often underestimated by buyers. Moreover, buyer agents should not have a financial incentive to be paid more the higher the sale price,” Brobeck said in a report.

Sellers rejoice?

For folks selling their homes, the changing landscape should bring some quick respite, as their agents no longer have to make an offer of commission to buyers’ agents. 

Nearly 9 in 10 home sales are handled by real estate agents affiliated with the NAR, the nation’s biggest trade association. It required that home sellers figure in a commission rate, usually 6%, before listing homes on its property database, known as the Multiple Listing Service, or MLS.

The commission borne by home sellers was then divided between agents for the seller and buyer. While on paper subject to negotiation, the fee was the focal point of the lawsuit lost by the NAR and brought by a group of home sellers, who claimed the trade group and others colluded in driving up the commissions.

In June, the median sale price of a home was $442,451, according to Redfin. Under the previous practices sellers would be paying $26,547 in commissions. That customary rate is no longer the default.

Sellers can now expect to be asked for just one side of the commission pot, or what would now average 2.5% to 3%. 

“For the first time now, buyers will have the opportunity to negotiate the buyer commission,” said the CFA’s Brobeck. “We suggest setting a target of 2% or less,” the advocate said. Matched with the buyer agent’s commission that would mean paying overall commission closer to 4% rather than the current standard of 5% to 6%, he added.

In a separate but related development, almost any American who sold a home in the last fives years is covered by the class-action settlement with NAR and other brokerages. How much anyone is entitled to depends in part on how many sellers submit claims, and other factors including where one lives and when your home was listed. 

To see if you’re eligible, check here. 

More from CBS News

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York, where she covers business and consumer finance.



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Maryland guide to negotiating as real estate rules change

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Buying or selling real estate is perhaps the most complex transaction you’ll ever make.

That’s the cautionary adage some Maryland realtors tell prospective buyers and sellers. Hire us, they say, and we’ll advocate for you until the keys change hands.

How agents are compensated for that time and effort is the central focus of several changes coming Saturday to the National Association of Realtors. While denying any wrongdoing, the trade organization agreed to a sweeping overhaul of how it operates to settle a class-action lawsuit that alleged its policies and practices had artificially inflated commissions at the expense of sellers.

The settlement agreement ends the practice of posting compensation offers alongside properties on multiple listing services, and realtors must also sign a written compensation agreement with buyers before touring a home.

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Maryland has a law on the books requiring buyer agreements that disclose the specific amount or rate of compensation the real estate broker will receive. Even as realtor associations in the state say their fees have always been negotiable, the settlement has attracted fresh attention to the practice.

Here’s what Marylanders need to know.

Agent commissions add up

Agents representing both buyers and sellers have traditionally split a commission of 5-6% of the sales price, often paid by the seller. The Maryland Association of Realtors estimated the median sales price for a Maryland home was $430,000 in May, putting compensation around $21,000-$25,000 to be split between buyer and seller agents.

Some agents are concerned the policy changes will put more pressure on homebuyers to come up with financing for commissions, said Sarah Rayne, CEO of the Howard County Association of Realtors.

A home listed for sale on Multiple Listing Services will no longer include a blanket offer of “cooperative compensation,” in which the seller pays for a buyer agent’s commission. Buyers can still ask sellers during negotiations to pay for their agent’s fees.

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The practice of sellers’ agents splitting a commission with the buyers’ agents is known as cooperative compensation. The settlement agreement changes the way properties are advertised to no longer include a blanket offer of cooperative compensation to a prospective buyer’s agent when they advertise the property.

“They’re already kind of struggling to come up with a down payment, closing costs, all that money that you need to bring to the table in order to buy your first home,” Rayne said.

Rayne said first-time homebuyers are getting priced out of Howard County, a hot market where some starter homes are listed around $500,000 to $600,000. The lack of affordable inventory can contribute to a lot of competition for listings, she said.

If buyers are concerned about affording an agent, they may go into a transaction alone. They may have cost savings upfront, Rayne said, but they won’t have an advocate heading into financial negotiations later.

“They need somebody there who can help them work through this process,” she said.

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Figure out what you need

Not everyone is going to need an agent. That’s one of the tips Joanne Cleaver, a former real estate journalist and author of a book on negotiating realtor commissions, has learned over the years. The writer runs a Facebook group for buyers and sellers centered on negotiating how agents represent them.

For example, some property transactions require the help of a real estate attorney. If the attorney can handle the negotiations and transaction, perhaps an agent isn’t necessary, Cleaver said. Retaining a real estate lawyer could cost less than an agent commission in some cases.

First-time homebuyers or people searching for property in another state may prefer to work with an agent who has knowledge of a region or specific expertise. Experienced buyers and sellers also shouldn’t assume they can go it alone, Cleaver said.

That’s why it’s crucial for buyers to do research before hiring an agent.

“This is not ‘House Hunters,’” Cleaver said. People may think they need to move fast, but she cautions against signing a contract with an agent out of eagerness to buy a house.

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Sellers can also reduce the cost of commissions. Cleaver likes to ask agents what work they do beyond listing the home. Could some of that work, such as organizing an open house, be handled by the seller, Cleaver said.

When Cleaver was selling a home in Michigan, she found a discount agent who agreed to a flat fee of about $900 in exchange for listing the home. She reused old listing photos, wrote up the home description herself and timed the listing to go live on a Friday in hopes of catching the weekend house hunting crowd.

Within hours, Cleaver said, the agent forwarded an inquiry that resulted in an offer by the end of the day.

If an agent balks at a buyer or seller’s request to negotiate, Cleaver recommends not hiring them.

“Agents are really in a moment where they need to prove their value,” she said.

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Talk to more than one agent

Buyers and sellers should interview several agents before signing an agreement, said Cheryl Abrams Davis, president-elect of the Maryland Association of Realtors. The organization represents about 28,000 realtors.

“This is like anything else that you do in life when you go to a doctor or hire a tax preparer,” she said. “Those same questions you’re going to ask of them, you’re going to ask of your realtor.”

Abrams Davis recommends asking realtors about their negotiating experience, how long they have been in business, how many buyers they have worked with and how many houses they’ve sold. Reviews from other clients are important too, she said.

“The beauty of this process is that there are various options” for agent financing, Abrams Davis said. Some agents ask for a flat fee, and others set a percentage rate of the sales price.

The Maryland Association of Realtors puts out its own list of recommended questions for first-time homebuyers in choosing an agent. Association leadership said agent compensation must be specific, such as a percentage of sales price, a flat dollar amount or a combination of both. It cannot be open-ended.

“We are all about making sure there’s transparency about the process for all Marylanders and anyone moving into our state,” she said.





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New rules shake up real estate market starting Saturday: ‘We’ll see how this goes’

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HOUSTON, Texas (KTRK) — Realtors are bracing for the biggest shakeup to their business in decades. Starting Saturday, Aug. 17, their commission structure will change.

The new rules result from a settlement announced in March by the National Association of Realtors. They eliminate the long-standing 6% commission sellers pay, which could potentially lower home prices.

Before this settlement, the industry was essentially setting commission rates.

A seller’s agent typically charges the seller 6% and shares the fee with the buyer’s agent.

Starting Saturday, sellers won’t be expected to make commission offers to buyer agents. That gives them the potential to pocket more money from selling their property.

RELATED STORY: Biggest shakeup in a century set to hit real estate agents this week

Starting August 17, new rules will roll out that overhaul the way Realtors get paid to help people buy and sell their homes.

It also means home buyers will ultimately be responsible for compensating their agent.

“We’ll see how this goes,” Tricia Turner with Tricia Turner Properties said. “Right now, buyers don’t have extra money. They have to come up with their closing costs and downpayment. To stick another fee on top of that is definitely going to change things. I will tell you, homeowners already are saying, ‘No. I don’t want to pay that buyer agent’s compensation.'”

Under the new rules, home buyers will also be required to sign a representation agreement with an agent before even touring a home.

For updates on this story, follow Briana Conner on Facebook, X and Instagram.

SEE ALSO: In 22 states and DC, buyers need six-figure household income to afford a typical median-priced home

A new report finds that in nearly half of US states, buyers will need a six-figure household income to afford a median-priced home in their state.

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