The Big Picture: Changes in Real Estate Standards 2024

Starting in August 2024, the standards of practice for listing and selling real estate will undergo significant changes. The reason behind these changes is straightforward: the National Association of Realtors (NAR) has settled a class action lawsuit, leading to a new approach to paying commissions for real estate services.

Traditionally, real estate commissions have always been negotiable. However, the new rules will introduce an "unbundled" payment structure. Let’s break down what this means for both sellers and buyers:

Changes for Sellers

When a seller signs a Residential Listing Agreement (RLA), it will now specify only the amount the seller will pay their broker.  Prior to this change, the RLA included an amount to be paid to the Buyers Broker/Agent.  Additionally, the RLA will have a new section where the seller permits the broker to offer concessions to the buyer (i.e. credit for closing costs). While to offer of commission to the Buyers Broker/Agent is no longer part of the listing agreement, it is still an offer many sellers may chose to offer during the negotiation process.

This change aims to make the cost of selling a home more transparent and gives sellers more control over their expenses.

Changes for Buyers

Buyers will also see changes. When buyers start looking at homes, they will sign a Buyer Representation and Broker Compensation Agreement. This agreement will detail the amount the buyer agrees to pay their broker upon the successful close of escrow.

When a buyer makes an offer via a Residential Purchase Agreement (RPA) on a property during the negotiation process, they can ask the seller to cover their obligation to their broker. Alternatively, the buyer can choose to pay it themselves. This new point of negotiation provides more flexibility and clarity in the transaction process.

What This Means for You

These changes are designed to make the process of buying and selling homes more transparent and give buyers and sellers more control over their financial obligations. It’s essential to understand these new terms and how they might affect your real estate transactions.

The Destination Real Estate Team is here to help you navigate these changes smoothly. If you have any questions or need further clarification, please reach out directly to your agent.