HUNTSVILLE, Alabama (WAFF) – Greater transparency in the real estate industry is the goal of several major changes that will take effect August 17.
For decades, home sellers typically paid their agent a 5 or 6 percent commission when selling their home, and the agent then split that commission with the buyer’s agent.
Now the home buyer must instead negotiate with his buyer’s agent about his commission and how he will be paid.
Brenda Elliott, CEO of Weichert Realtors, said the new rule will also require prospective homebuyers to sign a written buyer’s agreement before viewing a property.
To do this, purchasing agents must discuss in advance how commissions will be paid.
“They know exactly how the agent is paid, and in fact, the agent’s pay may not change that much because they may still ask the seller to help them cover the closing costs, which would help them pay the agent,” Elliott said.
These new rules are part of a $418 million settlement announced in March by the National Association of Realtors.
This settlement is the result of a lawsuit filed after homeowners felt they were forced to pay excessive realtor commissions when selling their homes.
This creates additional costs for the seller, which some experts believe will lead to higher property prices.
Elliott believes the new rules will benefit both home buyers and sellers.
“This means there will be more transparency in the way we do business,” Elliott said. “What emerged from the litigation was that sellers and buyers didn’t necessarily know how their broker was being paid, and now it’s up to us in the industry to make sure buyers and sellers know exactly how we’re being paid.”
The amendment will also prohibit the inclusion of brokerage fees in multiple listing services.
Elliott said the new change could offer consumers more flexibility.
“The buyer can pay the entire fee themselves, or something that hasn’t been done often,” Elliott said. “It can be a combination of both, so the seller and the buyer can share a portion of it.”
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