The National Association of Realtors (NAR), the leading authority for real estate agents, brokers, and firms, has recently implemented new rules regarding the advertisement of Buyer Agent Commissions (BAC) in property listings. Previously, seller’s agents could publicly display the commission percentage offered to buyer agents. Under the new guidelines, this information can no longer be posted or advertised. So, what does this mean for you as a home buyer or seller?
Understanding the origins of this change is crucial. The Department of Justice initiated this settlement to protect home buyers and sellers from potentially unethical practices by real estate agents and firms. The concern was that some agents might limit the properties they show to clients based on the BAC offered, refusing to show homes with lower commission rates. This practice could prevent clients from seeing all available options. It’s important to remember that agent commissions are negotiable, determined through discussions between the real estate agent or broker and the client. There are no legally mandated commission rates.
For sellers and their agents, these new rules mean that buyer agents will likely contact you in advance to inquire about the BAC you’re offering. Many may request a signed Broker’s Agreement before proceeding with a showing as a precaution to ensure the commission rate is confirmed in writing.
For buyers, the key question is what happens if the seller isn’t offering a sufficient commission to your agent? Again, this is negotiable between you and your agent. Traditionally, it has been a selling point that buyers did not incur agent costs, as sellers typically covered commissions. With BAC information no longer publicly available, the decision to hire an agent may increasingly depend on trust and the agent’s expertise rather than commission incentives. Remember that an agent’s expertise and experience can save you more money in the long run.
It’s wise to carefully review the Buyer Agreement provided by your agent, which outlines the proposed payment arrangements. The updated standardized TREC forms for both buyer and seller agreements now include a clearer breakdown of agent fees for both parties.
While this change may seem minor, staying informed about the rules and regulations governing real estate transactions is essential.
