Well, it has certainly been an interesting year in real estate. To listen to mainstream media, real estate is a dumpster fire. Have there been changes in the real estate industry? Yes! Yet homebuyers and sellers still need us, and thus far, we have navigated the changes to help clients still reach their real estate goals. Let’s take a look at the changes so you are informed with facts, not fear.
MLS disclosure. Every MLS and realtor association is going to reiterate that broker commissions are negotiable and not set by law. For the record, commissions have always been negotiable, so this is not much of a change except for additional bold print disclosures throughout the paperwork you receive.
Compensation. Speaking of MLS, any mention of compensation in the MLS has become a dirty word. The reality is all compensation fields have been removed from the MLS and there can be no offer of compensation in the MLS. Now this is a more sizable change as this was the typical location where compensation was addressed. Please note: this does not mean compensation cannot be offered. Sellers can absolutely offer compensation and buyers can request it in their offer.
Written buyer brokerage agreements. Agents have to enter into a written buyer brokerage agreement prior to showing a property to a prospective buyer, whether in-person or virtually. These agreements must have disclosure of compensation as well as expectations surrounding the duties of the agent as well as the buyer. Fair enough! Fun fact, this requirement has been law in Virginia since 2012 and encouraged since the 1990s, so this certainly isn’t new.
With any new changes, this is an opportunity to focus on best practices.
Buyer consultation. I know it’s fun to view houses (it’s like our very own HGTV, right?), but this is possibly the most expensive purchase you will make in your lifetime. Take time to find the right REALTOR® for you, and the beginning of that process should include going over the buyer/broker agreement and applicable disclosures at a minimum, but also discussion on the buying process, education on the real estate market and connecting you with a lender for pre-approval so you have a clear understanding of the financials tied to your purchase.
And when it comes to compensation, if you do not have those funds readily available, that does not necessarily mean your search is over. We recently had a “Best Practices in Affordable Housing” session where we invited speakers from the local housing authority as well as a lender who highlighted numerous programs and funding that can assist with closing costs, down payment and agent compensation.
Seller consultation. As part of the process of listing a home, many people know about a comparative market analysist (CMA), but almost as important is the next step — estimated net proceeds. On this document, there is an itemization of estimated fees which may include compensation to a buyer’s agent. This is the time to not only decide pricing and estimated net, but also the marketing strategy to sell your home. That may include buyer agent compensation and if it does, you would want to discuss the ways your REALTOR® would advertise it outside of the MLS.
Agent compensation. Especially at certain price points, based on market demand, dependent on location or unique attributes of a property, it might be advantageous for a seller to still offer compensation to a buyer’s agent. Or, at least be prepared for the request. Speak to your REALTOR® about the insights of offering buyer’s agent compensation. Remember, it’s negotiable.
You know what has not changed for many REALTORS®? Their commitment to earn their compensation by bringing value to their sellers and buyers in an effort to help them realize their real estate goals.
