What agents need to know about commission rule changes
As a part of its proposed settlement, NAR agreed to significant policy changes that will impact how all agents do business — and how buyer agents get paid.
Key points:
- One of the biggest changes brokers and agents can expect to see is the removal of the “offer of compensation” field in the MLS.
- Instead, brokers and agents will have to negotiate compensation directly with their client.
- Additionally, NAR is now requiring agents to enter into buyer agreements before touring any properties.
NAR's pending settlement agreement includes important changes to agent and broker business practices, most notably the removal of buyer agent compensation from MLS listings.
How will agents be impacted, and when will these changes go into effect?
Here are three things agents need to know.
The 'offer of compensation' field is going away
Listing agents will no longer be allowed to include offers of compensation on the MLS. This rule will go into effect in mid-July, NAR said.
Previously, listing brokers had been required to enter a number in that field, and NAR had recently agreed that the number could be $0. Now, "the National Association of Realtors will no longer even require a listing broker to put in zero or a penny," an NAR executive told journalists during a press call.
Instead, agents and brokers will have to negotiate compensation directly with clients — outside the MLS. In other words, "if a seller wants to market their property by providing a benefit for buyers to come see that property, [they] can continue to do so," the NAR representative said.
Buyer agreements will be required
Another big change coming in July is the use of buyer agency agreements. "We are now going from a strong recommendation to a mandate," an NAR rep said during the call.
NAR said that all MLS participants working on behalf of buyers "would be required to enter into written agreements with their buyers before touring a home."
Mandating agreements, NAR suggested, provides both transparency for consumers and flexibility in the types of services and level of value individual agents provide.
"Our 1.6 million members [represent] a wide variety of business models and compensation structures, from flat fees that are sometimes as low as $100 all the way up to the most expensive, white glove brokers," an NAR rep said.
Buyer agents will no longer automatically be paid by listing brokers
Although listing and buyer-broker compensation will be decoupled, NAR said there are three main ways buyer agents can still get paid:
Buyer clients can pay their agents directly
Sellers can offer compensation in the form of a concession
The listing broker can offer a portion of their compensation to the buyer agent
However, all forms of compensation have to be negotiated between agents and their clients directly.
NAR said the organization believes the rule changes will be positive for the industry, and market forces continue to determine how agents are compensated.
"We're confident that both broker competition and seller and buyer competition will not be directly impacted by this," a rep said to reporters. "We don't set or recommend or set commissions — the commissions are set by the market and we expect the market will operate how the market operates."