Understanding the NAR Settlement: What It Means for Homebuyers
by Nicole Strom 08/22/2024
Understanding the NAR Settlement: What It Means for Homebuyers
Buying a home is one of the most significant financial decisions you'll make in your lifetime. As a homebuyer, it's essential to have a clear understanding of the processes and protections in place to help you make informed decisions. The recent settlement involving the National Association of REALTORS® (NAR) has brought about changes that directly impact you, the homebuyer.
Key Changes to Know
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Written Agreement with Your Agent:
- Before touring a home, you will now sign a written agreement with an agent. This ensures that both you and the agent are on the same page regarding the services provided and the compensation involved.
- It is crucial to thoroughly review this agreement to ensure it accurately reflects the terms you've negotiated with the agent.
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Compensation Transparency:
- The buyer agreement must clearly disclose the amount or rate of compensation your real estate agent will receive. This disclosure ensures you know exactly how much your agent is earning and prevents any surprises later in the process.
- Compensation must be objective and explicitly stated in the agreement—whether it is a flat fee, percentage, or hourly rate. The agreement will prohibit the agent from receiving any additional compensation beyond what is agreed upon.
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Negotiable Broker Fees:
- The agreement will prominently state that broker fees and compensations are fully negotiable and are not set by law. Broker compensation/commissions have always been negotiable, but now this verbiage is added to your Agency Agreement with your agent. This transparency allows you to discuss and agree on fair compensation with your agent.
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Flexibility in Written Agreements:
- Written agreements are necessary for both in-person and virtual home tours, ensuring consistency across all types of interactions.
- However, if you are simply inquiring about services or speaking to an agent at an open house, a written agreement is not required.
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Seller Compensation:
- While the seller can still offer to compensate your agent, this offer cannot be shared on a Multiple Listing Service (MLS). This change ensures that compensation agreements are directly negotiated between you and your agent.
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Seller Concessions:
- You can still benefit from seller concessions, such as offers to pay your closing costs, to include your agent's compensation, ensuring that this common practice remains intact.
What Hasn’t Changed
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Ethical Obligations:
- Agents who are REALTORS® continue to be ethically obligated to act in your best interest, abiding by the REALTOR® Code of Ethics and maintaining a fiduciary oath to put your needs above their own.
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Negotiable Compensation:
- Compensation remains fully negotiable. Your agent is required to have clear and transparent discussions with you about their fees, so there are no hidden costs.
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Empowered Choices:
- You have the power to make informed decisions throughout the homebuying process. Working closely with your agent, you can explore all options and make the best decisions based on your needs.
For more detailed information about these changes and what they mean for you, visit NAR’s Official Information Page.
Get Expert Help Today
As you navigate these changes, having an experienced and trustworthy agent by your side is more important than ever. If you have more questions and would like to know how these changes impact you, I am available to answer those questions.
Visit NicoleStromRealtor.com for more details, or call 719-922-0102 to schedule a consultation.