You may have heard about upcoming practice changes by the National Association of Realtors (NAR) that go into effect on August 17, 2024. What does it all mean? I’ll break it down here.
There are two KEY changes -
1. Every buyer represented by a NAR-affiliated agent is now required to sign a Buyer Representation Agreement formalizing the relationship between the buyer and real estate agent/broker before touring properties.
2. Buyer’s agent compensation can no longer be advertised on the Multiple Listing Service (MLS). Compensation has to be advertised, offered and negotiated outside of the MLS.
WHAT DOES THIS MEAN FOR SELLERS?
Come August 17, sellers will still have the choice, as they always have, to offer compensation to buyers’ brokers, and it may be in a seller’s best interest to pay buyers’ commissions to attract more buyers to their property.
Offers of compensation on the part of the seller cannot be included in the MLS, but agents can advertise them in their marketing materials such as emails, social media, phone calls, their own website, the listing’s website. Sellers can still offer buyer concessions on an MLS (for example, concessions to pay buyer closing costs).
So, not much changes in practice for sellers.
WHAT DOES THIS MEAN FOR BUYERS?
Starting August 17, buyers will be required by law to sign a written agreement (Buyer Representation Agreement) with their agent before touring a home, whether virtually or in person. They do not need a written agreement if they are just speaking to an agent at an open house or asking them about their services.
This is a new requirement in New York state for buyers. In some states, this practice has already been in place.
WHAT’S THE BOTTOM LINE?
Agent compensation continues to be fully negotiable, as it always has been, and is not set by law. Buyers’ agents cannot perform real estate services without a signed agreement in place. There might be cases in which buyers are required to pay their agent a commission, per the Buyer Representation Agreement in place, if the seller is not covering it and if the buyer hasn’t negotiated it into the purchase price offered. This will not happen in the vast majority of cases in my market in Westchester County, in my opinion, as I think many sellers will continue to offer compensation to the buy side to attract the most buyers possible to their property and therefore set themselves up to achieve the highest sale price possible.
