2024 Real Estate Industry Changes
3 changes to be aware of
Listing contracts will ‘de-couple’ brokerage compensation. The listing brokerage fee will be separate from the cooperating brokerage compensation.
Buyer agency agreements are now MANDATORY to be signed PRIOR to touring homes. The agreements indicate that in the event the brokerage compensation is not being paid from the proceeds of the sale, the Buyer will be responsible for compensating their broker at the time of closing. This scenario will increase the Buyer’s cash needed to close.
New MLS rules remove cooperating brokerage compensation from the site. This means that listing agents are not allowed to advertise the cooperating brokerage commission on the MLS.
real estate industry changes
After years of national legal discussions, the real estate industry has some mandatory changes to policies, practices, and contracts rolling out AUGUST 2024.
The changes revolve around brokerage compensation. Compensation has never been an industry set standard and varying business models have been available to consumers.
Real Estate brokerages provide a professional service to consumers looking to buy and sell property.
Many are familiar with the full service structure. For nearly 40 years since buyer agency came into existence, a buyer agent’s compensation has been included on the Listing Agreement with the Seller. The agreed upon commission was paid through the proceeds of the sale and split with the cooperating broker representing the Buyer.
A Buyer focused on the purchase price and determined how much cash they needed for a down payment and closing costs.
The brokerage compensation will now be ‘de-coupled’ in the listing agreement. The Seller will agree to the listing fees to their listing brokerage separate from the compensation offer to the cooperating broker.
a few of my thoughts…
Prospective home buyers are nervous about this change as it presents the possibility of increased closing costs OR reduced agency services. Please don’t panic! We are in this with you and strongly believe all buyers deserve professional representation. We are committed to helping you navigate these changes.
The challenge will be when Sellers do not allow the Buyer’s Brokerage compensation to be paid from the proceeds of the sale. In these situations, a buyer will need to plan for higher closing costs in order to compensate their brokerage.
We advise Sellers that offering for the Buyer’s brokerage compensation to be paid from the proceeds of the sale is in their best interest. A properly represented, qualified buyer is more likely to close smoothly.
If a Buyer cannot roll their brokerage compensation into the purchase price (and their mortgage), then it will impact their cash needed to close and reduce their buying power.
We are ready!
Our team has been preparing for this shift for months. Our priority has always been to ensure that all of our clients (buyers and sellers) are properly represented and protected!
We advise our Sellers that when marketing their property, it’s important to make the path to an offer as easy as possible for a buyer searching in this price range.
We will work will our Buyers on how to best navigate these changes to ensure they are proceeding on a financially responsible path to home ownership.
As professionals, we welcome improvements to policies which help legitimize our industry and which protect both consumers and brokers. We will continue the discussions around these changes and update our clients as the industry and our team adjusts and irons out the details.
Questions?
Please reach out to chat about any thoughts, reservations, concerns around these changes!