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New rules from a national court settlement have changed the way commissions and payments work for real estate agents.
The National Association of Realtors settled a lawsuit related to commissions months ago. It took effect this week.
“The class-action lawsuit really was claiming that there were issues with the way the commissions were being set across the country for realtors working with their clients,” said Carrie Chang, CEO of the Minneapolis Area Association of Realtors. “Part of the settlement included some practice changes. Although we didn’t believe there was anything with the practices — you know, currently being used — the goal of the settlement is to really answer the question around transparency.”
More Transparency
In an effort to increase transparency, the settlement requires buyers to sign a written agreement before looking at any houses. According to Chang, that has more significance in the national market than in Minnesota.
“Actually, not every state required you to have a buyers agreement in place before you start working with your realtor,” she said. “And so for us, luckily, that’s a minor change because we’ve always had those. The biggest difference locally for us will be that now it’s the timing and making sure you have that agreement in place before you see a house.”
Another change is related to Multiple Listing Service (MLS). Realtors are no longer allowed to list their anticipated compensation on MLS.
Chang says these new rules may help to spur debate between buyers, sellers, agents and brokers on compensation. That is, compensation or commission can be structured in a number of ways. Up-front discussion may mean that the variety of compensation models will enter into discussions early in the process.
“Especially here in our market, maybe Minnesota nice is not to start out right away with talking about the price and the money,” she said. “Those conversations up-front I think just will naturally mean that people are negotiating more.”
Brandon Doyle with Re/Max Results in Maple Grove said he isn’t predicting any big drop in compensation rates.
“The way it shows up on the settlement statement might change and the way we communicate the commissions might change, but I don’t think that they’re going to drop by any means, or drop drastically at least,” he said.
Chang feels the new rules shouldn’t be cause for alarm.
“It’s fine, everything’s going to be fine, we don’t need to panic,” she said. “And actually, still your biggest challenge is just finding that right property.”
SOURCE: CCX MEDIA
