The New Real Estate Rules Are Here

NAR’s Updates

In March, the National Association of Realtors agreed to eliminate certain rules regarding real estate brokers’ commissions in order to settle a class action lawsuit. These new rules recently took effect, which will have an impact on the home-buying process for both buyers and sellers.

What’s Changing?

Before the change, home sellers paid commissions to agents on both sides, representing the buyer and seller — typically around 5-6% of the sales price. Two new rule changes will change this:

1.   Sellers’ agents can no longer advertise commission fees to buyers’ agents on multiple listing services (MLS), a database of property listings for realtors. This rule aims to prevent buyers’ agents from steering clients toward listings with higher commission fees. (The agents can still gather the information manually.)

2.   Before touring a house, a buyer and agent must sign a legally binding representation agreement, which will require agents to disclose more information about their rates.

What Next?

According to early data, these changes may already be reducing commissions for sellers’ agents, saving sellers money. Buyers may now have to pay their agents directly, which could increase their upfront expenses. But experts argue that these changes could lower costs over time, as agents will be incentivized to compete more on price, value, and customer satisfaction.

That would be welcome news to Americans currently priced out of the market due to low availability, rising prices and high interest rates.

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