After months of mental gymnastics and form revisions, we are finally set to implement new rule changes in the Real Estate industry brought about by the landmark anti-trust case against the National Association of Realtors.
The amount of hemming and hawing has been unprecedented and for good reason; change is difficult, and it can be downright frightening. And while these new practices will not be simple or painless for those in the industry, or consumers alike, it does us no good to continue to lament. We can question whether the changes are positive or negative for consumers until the cows come home but it won't reverse our course. This is the new paradigm.
The time has arrived to adapt and learn how to leverage these new rules. After all, historically speaking, with any great shift in policy there have always been beneficiaries - why shouldn't it be you and me this time around?
Let me remind you, below, of the two (seemingly) basic rule changes that will be in effect beginning on 8/17/24:
- Listing agents will no longer be able to advertise the amount of compensation sellers are offering the buyer's broker/agent anywhere on the MLS.
- If you are a buyer (or even looking for a lease), you may not see, or really discuss in detail, any property with an agent unless you have signed a Buyer Broker Agreement with that agent outlining their scope of service to you, and how much (and how) they will get paid for those services.
These changes seem benign on the surface but once you begin to peel back the layers and run scenarios, the ramifications cut deep. Note, that I am only referring to how this may change real estate transactions and the impact it will have on the consumer, and not even going down the road of how it will change the industry I chose as a career.
There will be more paperwork needed and layers of negotiation that have never taken place in the past. Sellers will be faced with the question of whether they want to offer compensation to the buyers' broker (Of course, you do, silly! Let's discuss) and buyers will need to decide what they are willing to pay for their representation if the seller is not willing. And agents may need to decide, sometimes amid their clients clamoring for a new home, if they are willing to adjust an agreement.
In Bay Area markets, I expect most sellers to continue to offer standard compensation (2.5%-3%) to buyers brokers. In the past, sellers have done very well when unencumbered buyers can act with peace of mind. But, alas, in the event they do not want to pay standard commissions then it will fall to the agreement the buyer and broker have in place. An important thing to remember is that even if the seller is not offering to pay commissions, the buyer can still negotiate that condition in their offer. If given an inch to not have the buyer paying extra costs, I will do my best to make that happen.
It has taken me the better part of five months to work through possible scenarios that may (or may not) take place with the new rules and procedures in place, and I can say that I am as prepared as I will ever be. As has always been the nature of real estate transactions since my first deal 22 years ago, we should always expect the unexpected. In that respect, this change will be something that we, as agents, are used to. The good agents will find ways to navigate and gain advantages and the not-so-good agents will struggle to adapt.
The bottom line is that it will be more important than ever to have a smart agent who is passionate about service and who can adapt on the fly to protect you with strong communication, tight documentation, and savvy negotiations, in any given scenario.
If you would like to discuss how these changes might affect you or discuss new rules in detail, then please do not hesitate to reach out. If you are active as a buyer or a seller then you can expect to hear from me soon!
Onward we go, for better or for worse!
