Big news is brewing in the real estate world, and it will affect people nationwide. If you're a buyer or seller, you'll want to pay attention because the upcoming changes to the RMLS (Regional Multiple Listing Service) due to the National Association of Realtors (NAR) settlement are about to shake things up! In this post, we'll dive into the nitty-gritty of Buyer's Service Agreements, Buyer's Agent Commissions, and what these changes mean for buyers and sellers.
The NAR Settlement Unveiled Let's start with the basics. The NAR settlement, which stands for the National Association of Realtors settlement, is a game-changer for the real estate industry. It aims to promote transparency and provide more options for buyers and sellers. As part of this settlement, the RMLS (our trusty Regional Multiple Listing Service, where all of our listings originate) will be implementing several changes that will impact the way transactions are conducted. The primary change is that the Buyer’s Agent Commission (aka the “BAC”) field will be removed and the Listing Agreement will no longer include a shared commission field. EACH PARTY will negotiate with their agent independently.
Buyer's Service Agreements: A New Era of Clarity One of the significant changes coming our way is the emphasis on Buyer's Service Agreements. These agreements outline the terms and conditions between buyers and their real estate agents. In the past, these agreements were often overlooked or not fully understood. However, with the NAR settlement, there will be a renewed focus on clearly defining the roles, responsibilities, and expectations of both parties involved. This means that buyers will have a better understanding of the services they can expect from their agents, promoting a more transparent and efficient home-buying process. I’ve been using these now since late 2023 and really like them. So far, all my buyers are on board too. And note that an agent will not be allowed to show a home without a BSA in place.
Understanding Buyer's Agent Commissions Now, let's talk money! Buyer's Agent Commissions have long been a topic of discussion within the real estate industry. Traditionally, the listing contract included a shared commission between seller's agent and buyer's agent. However, the NAR settlement aims to change this practice, allowing buyers to negotiate their agent's commission directly. We are not yet sure what this will look like, but I know what I’m worth and am planning to include the BAC in the offers I write so that my buyers do not have additional out-of-pocket expenses.
Implications for Buyers and Sellers in Portland What do these changes mean for buyers and sellers in our beautiful city? Well, it's a mixed bag, but overall, it's a positive step towards a more fair and transparent real estate market. For buyers, the increased clarity through Buyer's Service Agreements ensures that they are well-informed about the services their agents provide. It will empower them to make informed decisions and establish a strong partnership with their agent.
For Sellers, there are THREE options to consider. In any case, the BAC (Buyers Agent Commission) will NOT appear on the MLS or any of the private real estate listing services (Redfin, Zillow, Realtor, etc). A Buyer's Agent will need to communicate with the Listing Agent to determine which scenario prevails.
Broker to Broker: The traditional model of offering a commission to the Listing Agent that they then split with the Buyer's agent. The Listing Agent can then promote the amount of cooperative compensation being offered.
Seller Contribution model: Seller determines how much they are willing to pay the buyer's broker for bringing a buyer to the table. This could then be promoted in non-MLS channels to advertise the amount the seller is willing to pay.
Open to negotiation/Zero: Seller only negotiates the commission with the Listing Agent, the buyer can then submit their offer including any amount of commission for the buyer's agent.
Some buyers may elect to work without an agent and submit an offer without a commission. This may be a good option - but there may be more challenges in dealing with a buyer who may not have experience in managing a real estate transaction. Furthermore, the liability may be increased as the Sellers agent may need to take on some of the tasks that the Buyer's agent typically manages. Tread carefully in these situations...and ask yourself: If you were a defendant, would you hire the same attorney as the prosecution?
To ensure a smooth transition and make the most of these changes, here are some steps buyers can take to prepare:
Stay Informed: Keep yourself updated on the latest information regarding the NAR settlement and the changes it will bring to the real estate industry. Visit reliable sources like the NAR website for accurate and up-to-date information on the settlement and its implications.
Understand Buyer's Service Agreements: Familiarize yourself with the concept of Buyer's Service Agreements. These agreements outline the terms and conditions between buyers and their real estate agents. With the new emphasis on written agreements, it's important to understand the content and significance of these agreements. Consider discussing the agreement with your agent to ensure clarity and alignment of expectations.
Communicate with Your Agent: Openly discuss any concerns or questions you may have about the NAR settlement with your real estate agent. Maintaining a transparent and collaborative relationship with your agent will help address any inquiries and navigate potential challenges effectively. Your agent can provide guidance and support during this transitional period.
Prepare for Negotiations: With the changes in Buyer's Agent Commissions, buyers now have the opportunity to negotiate their agent's commission directly. Familiarize yourself with the commission structure and be prepared to engage in negotiations with your agent and the seller. This can give you more control over your home-buying expenses.
Research Local Market Trends: Stay informed about the local real estate market trends, including affordability, economic factors, and buyer and seller profiles in the areas where you are looking to buy. Understanding the market conditions will help you make informed decisions and navigate the changing landscape more effectively. Maybe we will see tiered rates. It will depend on the market, the property and of course, what makes the most sense to reach the desired goal.
One thing is certain: Portland's real estate landscape is evolving. Buyer's Service Agreements and the newfound flexibility in Buyer's Agent Commissions will bring transparency and empowerment to buyers and sellers alike. These changes signify a positive shift towards a more equitable and efficient real estate market in our beloved city. So, whether you're thinking of buying or selling, get ready to embrace the future and make the most of these changes on the horizon.
Remember, change can be intimidating, but it also brings new opportunities. So, Portlanders, let's navigate this shifting real estate landscape together and make the most of what lies ahead. Happy home hunting and selling! And remember to CONNECT with ME when you’re ready to buy or sell!
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