There are a few changes happening in the real estate brokerage
industry – all moving toward a deadline of August 17, 2024.
These are the result of a proposed settlement between the National
Association of REALTORS® (NAR) and class action parties. Some
organizations have already made changes. Our agents have been
diligently training and have been equipped with new simple, clear
and concise client agreements and customer disclosures.
Gibson Sotheby’s International Realty intends to
protect and empower our clients every step of the way. Our agents
have been educating our Sellers and Buyers about their new options
and the benefits of each. We will also explain the risks associated
with the continued practices of the 12 MLSs (out of 500
nationwide) that have not opted into the settlement
terms.
Below is a simplified explanation of the changes to our business
practices and how they impact buyers and sellers:
Buyer Agents who are REALTORS® are now required to
have a representation agreement with their Buyer clients before
showing them homes. This agreement must outline the
relationship, the services, and the fee for services. While Buyer
Representation Agreements were required in other states, they were
not in Massachusetts.
-
Impact to Sellers: Since many Sellers will
no longer be offering Buyer Agent compensation (see below), Sellers
are likely to see the Buyer Agent fee written into the offer, so it
is financeable, as it has been in the past. -
Impact to Buyers: This allows Buyers to
have a better opportunity to negotiate and understand what they are
paying their agents. Any Buyers who have been working with our
agents prior to this change without an agreement or without a
specified fee within that agreement, will need to sign a new
agreement with our agent.
Buyer Agent Compensation will no longer be published in
most MLSs. Sellers never have been required to offer
Buyer Agent compensation. However, some MLSs had required offers of
compensation — though they could be as low as $1.
-
Impact to Sellers: Some sellers will
select to offer as low as zero to Buyer Agents. However, they can
expect that most Buyers will include their Agent’s fee written
into the offer, so it is financeable, as it has been in the past.
Our agents will be giving a Listing Agreement Addendum to any
property that is listed by our firm and is not under agreement when
the change takes place. -
Impact to Buyers: This means that, in most
MLSs, there will be no unilateral offer of Buyer Agent compensation
coming from the Seller or Listing Agent. When there is, the
information will be more challenging to find. Their agent will need
to do additional research and outreach to find out if there is an
offer and how much. Most Buyers will likely include their
Agent’s fee written into the offer, so it is financeable, as it
has been in the past. Since those offers of compensation remain
negotiable, we recommend that our Buyers write the Buyer Agent fee
into the offer, without regard for what was offered.
Two MLSs in Massachusetts (MLSpin and LINK) have opted
to continue to allow published offers of Buyer Agent
compensation. But, the offer now comes from the
Seller.
-
Impact to Sellers: This option may put
Sellers in a position of legal liability and potentially open them
up to compensation disputes. It also exposes their agent and their
agent’s firm to liability, as it goes against the proposed
terms of the class action settlement. -
Impact to Buyers: While the offer is
published, this offer might still be a point of negotiation. It is
no longer a unilateral offer of compensation. In other words, the
Seller’s offer of Buyer Agent commission might be retracted,
entirely or in part, during the negotiation with the Buyer. Sellers
may use offers of compensation as a tactic to attract buyers.
However, now the compensation amount offered may still be
negotiated down, or removed entirely during the offer stage.
Some Sellers may continue to publicly offer specific
Buyer Agent compensation amounts. Some Seller Agents
and their agencies are having trouble navigating the changes and
are encouraging Seller’s to make offers of
compensation.
-
Impact to Sellers: While we encourage our
Sellers to consider all offers, including those with Buyer Agent
compensation written in as a condition of the offer, we are
concerned that some Seller Agents are not explaining to the Seller
their potential liability for lawsuits that MLSpin warns Brokers to
explain. We also are concerned that this initial offer amount may
weaken their bargaining position during negotiations. -
Impact to Buyers: Sellers may use offers
of compensation as a tactic to attract buyers. However, now the
compensation amount offered may still be negotiated down, or
removed entirely during the offer stage.
What is not changing?
Buying or selling a home is still a challenging endeavor that
occurs only a handful of times in a person’s life. It is
typically brought on by other significant life changes, like a new
job, a growing family, a death, an investment opportunity, or other
stressful moments. There is a lot of expertise and wisdom that our
agents bring to their clients. They provide very important services
to their clients. They made a difference. That will never
change.
We welcome any questions you may have about these changes.
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