The recent changes to real estate commission rules, which took effect August 17, 2024, significantly alter how commissions are structured in real estate transactions. Historically, home sellers were required to pay commissions for both their listing agents and the buyer’s agents, typically resulting in total commission rates of around 5-6%. However, due to a recent settlement involving the National Association of Realtors (NAR), this requirement has been removed, allowing for more flexibility and competition in commission negotiations.
Key changes include:
- No Mandatory Commissions from Sellers: Sellers are no longer obligated to pay commissions to buyer agents as a condition for listing on the Multiple Listing Service (MLS). This move is expected to make the marketplace more competitive and transparent, potentially leading to lower commission rates overall.
- Written Agreements for Buyers: Buyers are now required to have written representation agreements with their agents, which clearly outline the fees and services provided. This ensures that buyers are aware of any costs upfront, promoting informed decision-making
- Impact on Buyers and Agents: While these changes could lower costs for some buyers, they may also shift the financial burden of agent fees to buyers, which could affect those who are already struggling with affordability, such as first-time buyers and those on fixed incomes. For real estate agents, this new environment may make it harder to earn a living, especially for those who previously relied on commission guarantees from sellers.
Overall, the reforms aim to make real estate transactions more transparent and consumer-friendly but could introduce new challenges for both buyers and agents in navigating commission negotiations.
In California, the compensation field has been removed from the MLS. A new field labeled Seller Consider Concessions is now available. If you have an active listing, you may want to modify your listing in the MLS. The new field can be used to advertise if concessions are offered, but specific dollar amounts or percentages are not allowed.
Santa Barbara Independent article on how these new rules might impact Santa Barbara Real Estate
