Sept 4th, 2024
If you landed here because you’ve heard information about commission changes in the real estate world, you’re in the right place.
As of August 17th, 2024, real estate agents representing sellers are no longer allowed to market any type of compensation being offered by the seller on the MLS. In short, buyers agents are “paid” by the buyers and listing agents are paid by the seller. What does this really mean? Here is a breakdown of the facts.
BUYER SIDE:
THE OLD WAY:
-Buyers agent’s had guaranteed compensation offered ahead of time from the listing agent.
-Compensation was shown on the MLS. Offered and shared between the listing agent and selling agent.
THE NEW WAY:
-Buyer’s pay their own agent and sellers will pay their own agent.
-Nothing is guaranteed from the seller, but can be requested.
-All requests for compensation from the seller are put in writing on the purchase agreement.
SELLER SIDE:
How commissions USED to work:
Selling your home: You agree to pay a fee or % of the sales price to your Realtor, the listing agent. That listing agent then places the home on the MLS and offers a portion of commission to a buyer’s agent to help them get the home sold. This fee commonly was 6%*. The majority of homes sold involved a “listing agent” and a “selling agent” (buyer’s agent). They would split the fee being offered.
*6% has been the traditional selling fee. This fee was and always has been negotiable. Some agents would list for 5%, 4.5%, or less. It was decided between the home seller and their agent in the listing agreement what fee was being offered.
Example: Jill is selling her home. She and her agent agreed that Jill would pay 5% total in compensation to her agent. Jill’s agent then listed the home on the MLS offering 2.5% to another agent to bring her a buyer. At closing both the listing agent and the selling agent received 2.5% commission for their part of the transaction.
How Commissions NOW work: the long explanation
-You want to sell your home. You agree to pay a fee or % of the sales price to your Realtor, the listing agent. The listing agent can still offer to split the commissions with a buyer’s agent, just like before, but now with the new ruling, they can no longer list out the % being offered on the MLS. No where on the MLS can the commission be referenced. (Even though, oddly enough, the MLS was created to share listings for this purpose.)
-If the buyer’s side wants the seller to contribute money toward the buyer’s agent’s commission, it must be written up in the purchase contract.
-As a seller, do you have to pay a commission to the buyer’s agent?- NO you do not, but it’s a smart move to pay it.
Here’s why a seller should still be open to compensating to the buyer’s agent:
– It isn’t realistic to expect buyers to have the funds to pay an agent on top of a down payment, loan closing costs, moving expenses and other misc fees tied to purchasing a home. This is why it commonly has always been paid on the seller’s side.
-Buying a home can be scary. It’s a large investment. Most people need an agent to guide them through the process so they know what homes are out there, how to get access to see it, what steps are involved to buy it and what to do when things come up that you aren’t sure of.
As Realtors, we carry the knowledge of experience. Whether it’s based on knowing an area of town, mastering how to write a competitive offer, recommending a lender, understanding rules and regulations in an HOA, or how to negotiate repairs after the home inspection. We do this every day. It is our profession. If you still have questions after reading this post, please let me know.
As an agent for over 20 years, my job is to represent my clients. To look out for and protect you from all the facets of buying and selling a home. My goal is to guide you wisely in one of the largest purchases you will ever make. I do not take this lightly. I pride myself on serving you to the best of my abilities. If we see a home that I feel is a “lemon”, I am going to point out why I think this and where I am coming from. I am not just a salesperson. I look at homes, like I am buying it for myself. If my only goal was to sell you “something”, I would not make it in this business. I have saved many from very costly mistakes. As your agent, your have my time, my confidentiality and my loyalty.
As always, if you have any real estate needs/ questions, please reach out. I’m here to serve.
