How the new real estate agent rules affect home buyers

The National Association of Realtors agreed to a multi-million dollar settlement in March 2024 to resolve a class-action lawsuit. As a result, the real estate industry instituted new rules on how home buyers, sellers and agents handle commissions and home listings. The new rules took effect on August 17 and can add another level of difficulty to an already challenging home-buying process.

Negotiating a representation agreement

The biggest change for home buyers is the need to negotiate and sign a representation agreement with their real estate agent. You need to have this written agreement before going on a home tour, whether it is in person or virtually.

The agreement requires the following:

• A specific and transparent disclosure of the compensation rate
• An objective and fixed compensation, such as a flat fee, percentage or hourly rate
• A statement about the negotiable nature of broker fees and commissions
• A term preventing your agent from seeking additional fees from other sources and receiving more than the negotiated amount

No more listed compensation offers

The new rules now prohibit home sellers from advertising commissions for buyer’s agents on multiple listing services (MLS) online. This doesn’t mean sellers are not allowed to offer buyer agent commissions at all. It only prevents them from advertising it on MLS websites.

This change mostly affects sellers, but you may also feel it indirectly as a buyer. The lack of advertised commission rates can potentially lead to more haggling, more paperwork and higher broker or agent fees.

No immediate impact on house prices

Some people hope this will help lower house prices since sellers now have the option not to pay commission fees for the buyer’s agent. Sadly, there is no expected immediate impact on house prices just yet.

In fact, there is a possibility that sellers might not lower their prices despite the cheaper agent commission fees. They may choose to retain their existing asking price for a higher profit.

Be ready to follow the rules

Consulting a legal professional can help you understand the rules more and stay informed regarding other changes in the homebuying landscape. More importantly, a real estate attorney can help ensure the validity of your written agreements with your agent and protect your interests.