On August 17, 2024, the NAR (National Association of Realtors®) lost a settlement and a new law was created. Have you heard about this? I won’t go too far into all the details, but let’s see what it looks like from a surface level.
When dealing with real estate of any kind (Buying, Selling, Investing, etc) it’s important to have someone you know and trust helping you make the right decisions as well as using their expertise to close the deal. For the past forever those people have been called Real Estate Agents. Then the NAR was formed so that Agents can become Realtors®. Realtors are held to a higher standard and must comply with the code of ethics. If they do not they lose their title/association with the NAR. So what changed for these Realors®?
Let’s say Sally is selling her home. Her Realtor® explains the value of her home and property. The next step is to also present cost when selling the property. These cost include repairs/replacements, closing costs, and commissions for the Realtor® . Now Henry is looking to buy a property just like Sally’s home. His Realtor® must sit down and go over the cost for buying a property. These cost include inspections, test, appraisals, closing cost, mortgage cost, down payment, and the list goes on. Henry’s Realtor® says, “But the great part is that I’ll help you buy a home for FREE!” Henry is thrilled he doesn’t have to pay commissions on top of all these other fees. However, is the Realtor® truly working for free? No, they expect the seller to pay commissions for the buyer and seller sides. This is why the settlement was lost. Using the word FREE means they would not get paid at all.
Let’s stop and think about the situation above. Sally needs to sell her home, and Henry needs to purchase a home. How do we get Sally and Henry in a deal? The best answer to this is a Realtor® representing both parties. Next question is, does Sally or Henry have to pay their Realtors®? Yes..
With the amount of money a buyer has to bring to the closing table in order to buy a property, it makes a lot of sense for the seller to pay the entire commission for both buyer and seller from the proceeds of the sell. The buyers Realtor® is now obligated to inform the buyer the percentage of commission they intend to be paid. However, if the sellers do not agree to pay the buyer’s Realtor® it defaults back to the buyer to pay that commission.
Again, this is very surface level, but how do you navigate with the new policies? If you are selling a property, be prepared to pay both sides of the commission. Imagine a buyer’s Realtor® looking at several properties and yours is the only one not paying the buyers Realtor’s® commission. Your house would likely not be as appealing to the buyer. Buyers have to bring so much to the closing table. We live in a day where there are many people not even buying because it cost so much. With this law in place the number of people not buying will increase.
The conclusion: Yes, pay your Realtor®!! If you’re serious about selling your home, pay both sides of the commission. If you’re a buyer, ask your Realtor® what percentage they expect in commission before signing a contract. Being a Realtor® is fun, but not enough fun to do it for free!
Pevahouse Realtor 