In August 2024 the National Association of Realtors (NAR) settled the class-action Sitzer-Burnett case brought against them by agreeing to a number of changes that affect Realtors in all 50 states.
The most important change resulting from the settlement dictates that home buyers must enter into a Buyer Agency Agreement with their real estate agent before the agent can show them any homes.
The agreement includes specific terms regarding how the buyer will compensate their real estate agent. In short, the Buyer Agency Agreement spells out the terms by which the agent will be paid a commission for representing the buyer.
So now buyers have to pay their agents?
As you can imagine, this court ruling appeared to deal a major blow to buyers, who now have to include the commission expense on top of any down-payment funds they are trying to save. To make matters worse, the commission amount is not allowed to be included in their loan to secure a mortgage.
Fortunately, the National Association of Realtors and real estate brokerages recognized that the system that had been in place for decades had been working well and was indeed in the best interest of both buyers and sellers.
How did NAR address this issue?
The court ruling with which the National Association of Realtors agreed to comply stipulates that sellers are no longer allowed to offer compensation to buyer’s real estate agents using the Multiple Listing Services (MLS) or any aggregated platforms that display listings available for sale.
Importantly, the court ruling did not prohibit sellers from offering to pay the buyer’s real estate agent’s commission; it simply prohibited such an offer to be included in MLS listings.
How did the real estate industry respond?
I can only speak for the areas I serve: Mercer, Burlington, Camden, Middlesex and Somerset Counties. Real estate agents have been speaking with their seller clients and explaining to them how offering to pay the buyer’s agent’s commission will increase the visibility of their listing and promote more and higher offers, especially in this competitive market.
Sellers have responded accordingly since last August, with the overwhelming majority of them offering to pay the buyer’s real estate agent’s commission.
What about the Buyer Agency Agreement?
The Buyer Agency Agreement stipulates that its terms are fully negotiable between the buyer and their real estate agent. The buyer can outright agree to pay their agent a negotiated commission, agree that an amount offered by the seller will cover the agent’s commission, or choose not to visit listings for which the sellers are not offering to pay the buyer’s agent’s commission.
I’m confused. All this seems complicated.
It sounds complicated because the new procedures are carefully designed to be in full compliance with the newly-passed laws in each state regarding commissions.
Whether you are a potential seller or buyer, this law will affect you the second you list your home for sale or ask a real estate agent to show you any home listed for sale.
Your best solution? Contact me. Call, text or email me and I will be more than happy to discuss this with you in as much detail as you need. Whether I represent you as a buyer or a seller, I will have only your best interests in mind and will leverage my 20 years of real estate know-how to translate that into a positive experience.
