Gellman Real Estate News: September 2024

Important Updates for Home Buyers: Changes in NAR Rules

Last month, I shared some significant changes in the real estate industry, particularly focusing on how buyer’s agents are compensated. The National Association of Realtors (NAR) has introduced new guidelines aimed at increasing flexibility and transparency in handling commissions, which impact both buyers and sellers.

Last month, I discussed the importance of sellers offering compensation to buyer’s agents and how this benefits the selling process. Interestingly, recent data from NAR shows that not only are sellers continuing to offer compensation, but the number of sellers offering compensation to buyer’s agents has actually increased. This trend is great news for both sellers and buyers, especially as interest rates are starting to drop, making the market more competitive and financially sound.

How Do These Changes Impact Buyers?

• Buyer’s Agent Agreement Requirement: One of the key changes is that real estate agents are now required by law to have buyers sign a buyer’s agent agreement before viewing properties. While this contract has existed for years, it was previously signed later in the process—usually when a buyer went under contract on a home. Now, it must be signed upfront. This contract also specifies how much commission your agent may earn.
• Commission Concerns: Many buyers worry they will now have to pay their agent’s full commission, but that’s not generally the case. Both buyers and sellers have the opportunity to negotiate commission before going under contract. In some situations, buyers may contribute to the commission, but this would be discussed in advance. There are even options to roll commission into your loan, reducing the need for upfront payment.

Benefits of Signing a Buyer’s Agent Agreement:

• Commitment & Clarity: The contract establishes a clear commitment between the agent and the buyer, ensuring the buyer is serious about working with the agent and reducing confusion or conflict.
• Agent’s Dedication: When buyers sign this agreement, agents are more likely to invest their time and energy into finding the best home, knowing their efforts will be compensated. This dedication leads to better service, from pricing negotiations to property advice.
• Legal Protection & Clear Communication: This contract provides legal protection for both parties and ensures transparency around compensation. Buyers will understand exactly how their agent is paid, whether by the seller’s commission or directly from the buyer.
• Access to Full Market Resources: When under contract, agents are more likely to utilize their entire network, including off-market listings, ensuring buyers access the best opportunities.

In short, these new changes in NAR rules foster better communication, trust, and clarity between agents and buyers, helping both parties navigate the home-buying process more smoothly.

The Gellman Team
Coldwell Banker Realty
325 Chestnut St. Suite 1300
Philadelphia, PA 19106
P: 267.259.0134
E: gellmanrealestate@gmail.com