New rules for real estate agents in the U.S.
This Saturday, August 17, new rules for real estate agents in the United States went into effect.
These rules, which govern the way most real estate professionals do business in the U.S., have changes that could radically change the way Americans buy and sell homes.
The new rules for real estate agents were agreed to by the National Association of Realtors, the powerful 1.5 million-member trade association, as part of a $418 million settlement of antitrust lawsuits.
The new rules for real estate agents are designed to transform how real estate agents are paid and who pays them.
In a statement, Kevin Sears, president of NAR, said the changes “help further empower consumers with clarity and choice when buying and selling a home.”
New rules for real estate agents in the U.S.: Two key points
One aspect that will change is the direct form of purchase from the real estate agent.
This is because real estate agent commissions (for both the buyer’s agent and the seller’s agent) used to be paid by the seller of the home.
Commissions typically amount to 5% or 6% of the selling price of a home, so for a $450,000 home, about the average price of a home in the U.S., a seller would be responsible for paying $27,000 in fees.
But as of this week, seller’s agents will no longer be able to advertise commissions to buyer’s agents on the multiple listing services that real estate agents use to post and find homes for sale and to facilitate transactions.
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That being the case, as part of the new rules for real estate agents, a buyer’s agent can no longer use the database to search for homes based on how much they will be paid, a practice called “steering.”
This led some agents to pass over homes that fit their client’s criteria just because a seller offered below-market commission rates, critics allege.
Another change in the new rules for real estate agents affects the relationship between prospective homebuyers and their real estate agents.
Buyers must now sign a legally binding representation agreement with their agent before they can visit homes together.
These agreements are designed to inform homebuyers how their agent is paid and, if sellers do not agree to pay the agent’s commission, the buyer may be required to make that payment.
They are also designed to inform buyers that this commission is fully negotiable.
A key element of these agreements is that a buyer’s agent cannot receive more compensation than the buyer initially signed up for, even if a seller is willing to offer more.
