Starting Aug. 17, broker commissions will no longer appear in MLSs connected to the National Association of REALTORS® (NAR), and buyer’s agents will need signed agreements with clients before touring any homes.
These changes spurred by NAR’s commissions lawsuit settlement may seem straightforward, but there are some nuances that are important to know for buyer’s agents, seller’s agents or clients trying to buy or sell a home.
While MLS PIN, New England’s largest MLS, does not operate under NAR, MLS PIN has opted to allow offers of compensation made by sellers, but with the stipulation that listing agreements disclose that the seller is neither required to offer compensation, nor required to accede to any cooperating broker’s compensation request. Additionally, if a seller elects to offer compensation, the MLS PIN listing agreement must indicate the cooperating broker will be an intended third-party beneficiary of the agreement with the right to enforce the same.
The Greater Boston Real Estate Board (GBREB) has updated its forms library to help agents navigate these changes. The GBREB Exclusive Agency, Exclusive Right to Sell, and Buyer Representation Agreements and forms all reflect updates to enable agents to follow the settlement requirements. The Offer to Purchase form also has been updated with a clause that allows buyers to request sellers to pay a buyer’s broker commission.
If you’re a seller’s agent working under an MLS affiliated with NAR:
Under NAR’s code of ethics, Realtors must work with their consumers to make sure they understand their options. It’s up to the broker how and whether to discuss with a seller the pros and cons of offering a commission to a buyer’s agent. For example, offering a commission to the buyer’s agent may help with the marketing of a property and drive up demand.
Agents on each side of a transaction can discuss commissions in person, over the phone, via text, through social media or any other form of communication that is not on the MLS or through a third-party seeking to replicate the MLS.
If you’re a buyer’s agent working under an MLS affiliated with NAR:
Real estate professionals using the MLS must have a written and signed agreement with buyer clients before those professionals show a potential buyer a home. This includes when an agent enters a home to provide a live virtual tour of a home for a buyer who is not present at the property.
A NAR spokesperson said prerecorded videos do not count as a tour. However, if a buyer views a property without the agent present, but the agent facilitated that visit, then it does count as a tour.
The agreement must specify the amount the buyer is willing to pay the professional. The compensation must be a dollar amount or percentage of the total transaction. And the buyer’s agent cannot be paid more compensation than the buyer is willing to pay.
If you’re a homebuyer or seller:
One of the biggest misconceptions about the NAR settlement is that it will change how much clients will pay for agent representation. Realtor commissions have always been negotiable, and they will remain negotiable starting Aug. 17.
Homebuyers and sellers have always had the ability to reach their own agreements with agents on commissions, using a flat fee or percentage. It’s up to the individual consumer to decide what they think is a fair price for the services of an agent and assess the value in working with a real estate professional.
There are roughly 3 million licensed real estate agents in the U.S., and NAR has about 1.5 million members, meaning homebuyers and sellers have options for representation. And clients, as always, have the option to do their own legwork and buy or sell without an agent.
Numerous studies show clients who work with agents are generally happier with their homes and negotiate better terms on their transactions, but it’s entirely up to those clients whether to go that route.
More detailed information about NAR’s settlement and the new rules and regulations are available in this fact sheet.