New regulations apply to real estate agents and people who want to buy or sell a house

(KMID/KPEJ)- A new set of rules governing most real estate professionals went into effect Aug. 17, forever changing the process of buying and selling a home. Local real estate agent Connie Coots of the Odessa Board of Realty said the changes will benefit both buyers and sellers.

The National Association of Realtors has adopted a new set of rules as part of a $418 million antitrust settlement; the new rules are designed to change how real estate agents get paid and who pays them, the biggest change to the organization’s rules in decades.

“NAR has agreed to settle claims brought by Michigan home sellers… NAR has agreed to remove commissions from our MLS…” Coots said.

In October 2023, a federal jury ruled that NAR “conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust law.” In short, the court ruled that NAR’s commission structure violated antitrust law because it essentially forced home sellers to pay a fee that the buyer could have paid.

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The lawsuit alleges that the sellers, who had to pay commissions to both agents, recouped their losses by raising their asking prices, which put buyers at a disadvantage and drove up home prices across the country.

Here’s what you need to know:

Historically, buyers did not have to pay their real estate agent directly. This is because real estate agent commissions for both the buyer’s agent and the seller’s agent were paid by the seller of the home.

Commissions typically range from five to six percent of a home’s sales price; for example, on a home priced at $450,000, about the median price of a home in the U.S., the seller would pay $27,000 in fees. Some real estate agents say these commissions have been added to the listing price of the home, inflating home prices.

But starting this week, sellers’ agents will no longer be able to advertise buyers’ agent commissions on multiple listing sites, which real estate agents use to list and find homes for sale and facilitate transactions.

That means a buyer’s agent can no longer use the database to search for homes based on how much they’ll be paid, a practice known as “steering” that has led some agents to skip showing homes that met their client’s criteria simply because the seller was offering a below-market commission, critics say.

The second change is the relationship between potential homebuyers and their real estate agents. If you are looking to buy a new home, and especially if it is your first home, the most important thing to know is that before you even step foot in your home, you must sign a contract with your real estate agent before they open the door to let you view the property. This contract will legally bind the buyer to a specific agent for an agreed period of time and will outline the real estate agent’s obligations to the buyer, as well as their fees.

These agreements are designed to inform homebuyers how their agent is paid, and if sellers do not agree to pay the agent a commission, the buyer may be required to pay that fee. They are also designed to inform buyers that this commission is fully negotiable.

To learn more about these changes, please visit this website.

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