FAQ
Navigating the NAR Settlement and New Real Estate Practice Changes
Welcome to our FAQ page on the NAR Settlement Agreement. The recent settlement agreement significantly changes real estate practices, particularly around transparency and broker fees.
Below, you’ll find answers to some of the most common questions buyers and sellers have about these changes. Whether you’re curious about new requirements, payment options, or how these changes might affect your transaction, we’ve got you covered.
Our team is well-versed in the new rules and is committed to ensuring you have the information and support you need to make informed decisions in your buying or selling journey. We’re always available to discuss your situation in more detail, so don’t hesitate to contact us for personalized guidance.
Why Are These Practice Changes Required?
These changes resulted from legal actions to improve transparency in real estate transactions. Since they’re now part of the legal framework, buyers and sellers working with a Realtor can’t opt out. The changes protect everyone by ensuring fees and services are clear and agreed upon.
As a Home Buyer, What are the Changes?
Buyers will now sign a written agreement with their broker before touring homes. This agreement will clearly outline the broker’s fee, ensuring buyers fully understand the costs and services involved.
As a Home Buyer, What are My Options for Paying my Broker Fee?
Prior to this change, it was common for the seller to fund the Buyer’s Broker’s fee with an agreement in the MLS that is no longer allowed. The seller can still pay the broker fee, but it may require extra negotiations. If the seller is unwilling or unable to pay the Buyer Broker Fee, the buyer will pay the agreed amount at closing.
As a Home Buyer, When is the Broker Fee Paid?
In most cases, the buyer’s broker fee is paid at closing by the buyer or the seller, and there is no upfront cost to the buyer.
Can I tour an Open House Without a Written Agreement?
Yes. The Listing Broker is “working for the Seller” and is not required to have a written agreement per the new rules, although each Broker can set their open house policy, which may vary.
For Home Sellers, What are the Changes?
Before this change, sellers typically offered a commission to the buyer’s broker through the Multiple Listing Service. Now, the MLS can’t communicate Buyer Broker commission offers.
For Home Sellers, Can I Offer Compensation to a Buyer Broker?
Yes, it just can’t be communicated through the Multiple Listing Service. Offering compensation to the buyer broker may be a wise sales tactic, so talk with your listing broker to strategize a plan.
For Home Sellers, Can I Offer Financial Assistance to the Buyer for Closing Costs?
Yes, Most loan programs allow Financial Assistance or Concessions for the Seller within limits. As a seller, this would be a way to attract buyers who may need this financial help to purchase the home. Seller assistance can be shown and promoted in the MLS.
What does it mean “Commissions are Negotiable?”
A broker’s commission isn’t determined by any law, rule, regulation, or trade association. Each broker sets their own fee.
Is This Going to Complicate the Real Estate Transaction?
Yes, it introduces more negotiation and strategy for buyers, sellers, and their brokers. It’s now more crucial than ever to have a broker who understands the new processes and agreements and possesses strong negotiation skills.