New Real Estate Rules Directly Impact Home Buyers

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As the real estate landscape continues to evolve, The HomeBuyer Brokerage remains dedicated to serving the unique needs of homebuyers in Washington D.C., Maryland, and Virginia. Our press release is below.

Overview of the NAR Settlement

The National Association of Realtors (NAR) recently reached a settlement agreement to end litigation brought on behalf of home sellers concerning broker commissions. In the settlement, NAR denied any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative commission practices offered on listings. However, as part of the agreement, NAR will pay $418 million over the next four years and has committed to significant changes in its commission rules. 

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Key Changes That Began on  August 17, 2024

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On August 17, 2024, new real estate rules went into effect as a result of the NAR settlement. The NAR revised commission rules removed all indications of a buyer broker commission from the Multiple Listing Service.

Any offers of compensation from a seller to a buyer agent or broker must be communicated through the listing brokerage website, email or other forms of communication. 

These changes are expected to reshape the real estate industry by altering the dynamics between agents, brokers, and consumers.

Impact on Buyer Broker Agreements

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With these new regulations, homebuyers and their agents will have to have signed buyer broker agreements to tour properties. The agreements musit include the following:

1. Specific Compensation Terms: The buyer broker agreement will clearly outline the services provided by the buyer agent or broker, along with specific, not open-ended, compensation terms. 

2. Negotiable Commissions: The agreement will include a statement that broker commissions are not set by law and are fully negotiable.

3. Dual and Designated Agency Clarity: If a buyer chooses to work with a listing agent in a dual or designated agency arrangement, the buyer broker agreement will clearly define the limited nature of the services provided to the buyer in these situations.

4. Defined Agreement Duration: The buyer broker agreement will specify the length of time the agreement is in effect, along with the termination date.

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 Changes in Fee Structures

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The revised buyer broker agreements will also specify how buyer agent or broker compensation is handled. Payment for these services can come from a seller subsidy, directly from the buyers, or a combination of both. 

This change raises concerns for home buyers.  If a home buyer is already responsible for earnest money, down payments, and closing costs, why should they also be required to cover additional agent compensation fees? Traditionally, the seller pays for their representation at settlement using funds provided by the buyer. 

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Potential for Increased Dual Agency

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The NAR settlement agreement will inevitably lead to significant changes in the real estate industry. In some cases, home buyers may opt to go directly to listing agents to make an offer on a property. This scenario results in dual agency, where one agent 'represents' both the seller and the buyer in a transaction. Dual agency occurs when both parties sign a dual agency agreement. 

However, dual agency often results in limited service for both parties, as the dual agent does not provide advice on sales price, contract details, home inspections, or other contractual terms.

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At HomeBuyer Brokerage, we consider dual agency to be the lowest form of representation—if it can be called representation at all—and strongly advise against signing a dual agency agreement.

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Understanding Real Estate Representation

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In the evolving landscape of real estate, understanding the role of different professionals is crucial. There are real estate brokers and real estate agents, each with distinct responsibilities. 

Real estate brokers supervise, train, and educate agents, and many own their own brokerages, overseeing the actions of the agents working under them. 

Agents, on the other hand, work under the supervision of a broker and can have various roles depending on the service provided to a client. For example, a traditional real estate agent can serve as a buyer agent today and a listing agent tomorrow, depending on their client's needs. Remember, exclusive buyer agents and brokers only work for home buyers. 

The HomeBuyer Brokerage Difference

At The HomeBuyer Brokerage, we represent home buyers—not properties. As exclusive buyer agents and members of the National Association of Exclusive Buyer Agents, we are committed to providing focused and undivided loyalty to home buyers, ensuring that they receive the highest level of representation.

Traditional real estate agents often work with both home sellers and buyers, which can lead to conflicts of interest. 

If you have questions about representation in real estate, how to make an offer, what goes into a contract offer, or more, 

 email Victoria@homebuyerbrokerage.com. 

We are here to help you navigate this new era in real estate with clarity and confidence.

How can we help?

The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.