Navigating the NAR Maze: A Simple Guide to the New Buyer's Law

Navigating the NAR Maze: A Simple Guide to the New Buyer's Law

 As the August 17, 2024, deadline has passed, the real estate world has geared up for some significant changes. These changes come from a settlement agreement involving the National Association of REALTORS® (NAR).

 If you’re a buyer—or even just thinking about buying a home—you need to know how these new rules might affect you. My name is Karen Lambert, Broker Owner of Tigress Realty, and I’m here to break it all down in plain language.

 What’s Changing?

 The new rules mainly focus on how real estate agents get paid, especially when working with buyers. Here's a simple breakdown:

1.        Commissions Are Still & Always have been Negotiable:

   Commissions have always been negotiable, and that hasn’t changed. NAR doesn’t set commission rates—they are agreed upon between you and your agent when you first start working together. However, what’s new is that these agreements must now be in writing before you even tour a home, whether in person or online. This written agreement will clearly spell out how much your agent will be paid, either in a fixed amount (like $X) or as a percentage (like X%, will mileage be charged etc.... No more vague ranges—everything needs to be clear and set in stone.

2.        How Agents Get Paid:

    Agents can still be paid in several ways, and the new rules don’t change the types of compensation available.

These can include:

   - A fixed fee that you, the buyer, pay directly.

   - Seller concessions, which are discounts or offers the seller gives to help cover your  

     costs.

   - A share of the listing broker’s commission, if agreed upon.

   What’s important to note is that these payment methods now need to be clearly defined and agreed upon in your contract before any home tours happen. This transparency helps you understand exactly what you’re paying for and ensures there are no surprises later on.

3.        Offers of Compensation:

    Listing agents can still offer to compensate buyer agents for their role in the transaction. However, a big change is that these offers can no longer be advertised on Multiple Listing Services (MLS). Instead, any offer of compensation must be shared through other marketing methods like flyers, emails, or brokerage websites. This change is designed to protect consumer interests while still allowing for flexibility in how agents are compensated.

  **PLEASE NOTE: LISTING AGENTS DO NOT HAVE TO OFFER COMPENSATION FOR THE BUYER AGENT; IF THIS IS THE CASE THE BUYER WILL HAVE TO BUYER AGENT COMMISSION AT THE CLOSING TABLE. Whether or not compensation is offered by the listing agent will be discussed and agreed to a second time before an offer is written.

4.    Seller Concessions:

    Seller concessions—where the seller helps cover some of the buyer’s costs—remain an option. These can include covering the buyer agent’s fees or other transaction costs like loan origination fees or repairs. Importantly, while seller concessions can still be listed on the MLS, they can’t be directly tied to the payment of the buyer agent’s commission. **Seller does not have to offer a seller’s concession.

Why These Changes Matter to You

These changes are designed to give you more clarity and control over the homebuying process. By ensuring that compensation agreements are clear from the start, you’re better protected against unexpected costs. Plus, the ability to negotiate and understand every part of your agreement means you can make more informed decisions.

What Should You Do Next?

- Get Everything in Writing: Before you start touring homes, make sure your agreement with your agent is clear, written, and signed. This will outline exactly how they’re being compensated and what you’re responsible for.

 - Ask Questions: If anything is unclear or if you’re unsure how these new rules affect you, don’t hesitate to ask. Understanding the financial side of your transaction is crucial to making the best decisions.

- Work with a Knowledgeable Agent:

 These changes are significant, and working with an experienced agent who understands the new rules will ensure a smoother buying experience. At Tigress Realty, we’re committed to guiding our clients through these updates with transparency and expertise.

Conclusion

 The new NAR law, effective August 17, 2024, brings much-needed transparency and fairness to the real estate market. By understanding how these changes affect you as a buyer, you can navigate the process with confidence. At Tigress Realty, I’m here to help you every step of the way.

 If you have any questions or need further guidance, feel free to reach out to me, Karen Lambert, Broker Owner of Tigress Realty. Let’s make your home buying journey as smooth and informed as possible.