As many of you may have heard, CHANGES are coming to the real estate industry! Due to a settlement reached in the landmark class action lawsuit filed in Missouri known as “Burnett vs. NAR et al”, two vital changes will impact how commissions are disclosed and paid. Judicial approval is expected by mid-July.
One new change will be that any agent working with a buyer MUST secure a “Buyer’s Agency Agreement” contract with the buyer before they take them to tour listings. The contract must be for a specific time frame and will state the total “buyer’s agency compensation” to be paid. In other words, agents will be “listing” their buyers with a set price for their services. That price could be a percentage, a total figure, a “per service fee”, etc. A buyer can still view homes by making an appointment through the list agent, but will not be represented by that agent on that home. In other words, buyers can still “sign shop” without an agent or representation.
Currently, “buyer’s agency compensation” is disclosed on the MLS to all agents/users of the MLS, but not the general public. This means the listing broker “announces” to all agents with potential buyers what the compensation will be if their buyer purchases the home. In that scenario, the listing company is offering to “share” a portion of their commission with the company representing the buyer. Under the NEW proposed rules, that compensation cannot appear on the MLS, but the information can be disclosed in another fashion, such as emails, texts, verbally, etc.
So, does that mean the buyer has to pay their agent along with all the other costs associated with buying a home, such as closing costs, down payment, inspections, etc.? No, not necessarily. Many companies will continue to “share” a portion of the total listing commission, meaning the seller will still be paying for the buyer’s agency commission out of their sale proceeds. However, some companies will be listing homes with the seller paying just their company. The buyer would have to ask, via the purchase offer, for the seller to pay a portion or all of their buyer’s agency compensation. It would be handled in the same fashion as when buyers ask sellers to help them with closing costs.
How does this help sellers and buyers? IF a seller contracts to list their home for just the cost of the seller’s share of the commission, the seller wouldn’t know, nor care, what the buyer’s company is being paid. Their only concern is “what’s the bottom line in net proceeds?”. Potentially, buyer’s agency commissions paid by the seller could vary, depending on the buyer’s financial needs, just like asking for closing cost concessions. A seller listing with a company offering to share a portion of the total compensation being paid with the buyer’s company would always pay the total commission agreed to on the listing contract.
Stay tuned for more information on these procedural changes as it becomes available.
Published in Louisville Neighbors 05/2024
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