Real Estate Is Changing. How Will It Impact You?

Big changes are coming soon to the real estate industry across the United States. If you’ve looked into buying or selling a home recently, chances are that you’ve seen news of the National Association of Realtors (NAR) lawsuit. As a result of that lawsuit, some aspects of your next real estate transaction might look a bit different.

At Peggy Slappey Properties, we’ve reviewed the changes and welcome them. At times, they simply reinforce what the best realtors in Georgia have been doing all along. Rules to protect our clients and reinforce the relationship between agents and clients are never a burden.

What was the lawsuit about?

In the simplest terms, the lawsuit sought to remedy a lack of transparency in how real estate agents are paid. In the past, a seller would list a home for sale with a listing broker and they’d agree to pay a total commission to that listing broker when the home closed successfully. Out of that total commission, it was common practice for the listing broker to offer to share a portion of that commission with the buyer’s agent. These terms were written and agreed upon. Under this practice, homebuyers rarely needed to pay a realtor directly; the realtor’s compensation came out of the overall commission paid to the listing agent.

According to the lawsuit and the new rules soon to be implemented, there were three big issues with how compensation was paid historically:

1. A lack of transparency to a buyer on how and what the buyer’s agent was paid.
2. A buyer’s agent could advise clients to consider only homes offering higher commissions.
3. A seller was not given the choice to opt out of offering the cooperating commission.

So what changes are coming to real estate?

To combat the lack of transparency, the new rules require that a buyer who wants to work with a buyer’s agent must have a signed Buyer Representation Agreement before viewing even one home. The good news is that in the State of Georgia, realtors already had a buyer agreement to establish that first firm relationship. It clearly outlines how the buyer’s agent will be paid at closing, a helpful conversation that all agents should have with clients early in the process.

To be sure agents are not steering clients only toward homes with higher commission offers, brokers are no longer allowed to include commission offers through the Multiple Listing Service (MLS). The MLS is a service realtors pay for that allows them to see all the latest property listings, tailored to their buyer’s wish list from price to location and so much more. Cooperating commissions can still be offered and paid by the listing agent, but it cannot be shown in MLS.

Buyers and sellers alike have more choices and more information to consider when negotiating how their agents will be compensated. They can agree to share the cooperating commission collected by the listing agent, a buyer’s agent can be compensated by a seller as part of the deal, or a buyer can pay their agent directly.

How does all of this affect you as a homebuyer?

First, and most importantly, buyers will have a crystal clear understanding of how agents are compensated and the various ways an agent can be paid. It’s now more important than ever to work with a qualified, reputable real estate professional. A great buyer’s agent advises and advocates for your interests throughout the transaction process; it’s almost like hiring a very knowledgeable consultant to work alongside you. To cement your initial relationship, you’ll sign a Buyer Representation Agreement before you see any homes with your agent.

As always, at Peggy Slappey Properties, we highly encourage you to sit down with a prospective agent before discussing any particular homes. That agent should let you know exactly what they’ll be doing for you, why they add value to the process, and why you should trust them to help with what, for many, is the biggest purchase of their lifetime.

The new rules will require your agent to contact each listing agent on homes you view to find out if there is an offer for a co-op commission. Then, you’ll discuss together whether the commission equals the buyer’s agent fee you agreed to earlier and if there is any shortfall or excess.

Keep in mind, even if a co-op commission is not offered, your agent can attempt to negotiate it as part of your offer. When a home does not offer a co-op commission, you as the buyer may have to pay your realtor directly.

What if a buyer doesn’t want to sign a representation agreement?

The new rules clearly state that in order to work with a realtor, the home buyer is required to sign an agreement to document the parameters of the work relationship, including how the realtor will be paid. However, if you don’t want help from a realtor and you’d like to buy a house on your own, that’s always an option. You’ll contact listing agents directly and ask to see homes as a service to their sellers. It’s important to remember that the listing agent only represents the seller, not you, unless dual agency is agreed to by all parties. In that case, you’ll need to sign the Buyer Representation Agreement anyway.

What happens if there is no co-op commission offer, or if the one offered is different than the amount agreed to in the buyer’s representation agreement? There are a few possibilities:

1. If the co-op offer amount equals the agreed upon amount in the buyer representation agreement, it’s a perfect fit and all parties are happy.
2. If the amount is more than agreed upon, the realtor is NOT allowed to take the additional money without your consent. In some circumstances, those additional funds could be credited back to you, the buyer.
3. If the amount is less than that agreed upon, you can pay the difference out of pocket, discuss rolling the additional expense into your loan with your lender, or request the seller pay the difference as a concession. This final option would be part of your offer to purchase, and if the seller doesn’t agree, then you don’t have to move forward with the purchase.

Even with all of the changes soon happening to the industry, a simple truth about real estate still stands: Whether you work with a realtor or not is entirely up to you. Please understand that who you work with matters. The new rules mean more informed buyers, and those buyers will need to carefully consider who they choose to represent them.

At Peggy Slappey Properties, our agents are backed by over 40 years of experience in metro Atlanta real estate. We’ve weathered market twists and turns for four decades, and we’ve seen more changes to how real estate is done than most. We’re taking these new rules as a chance to better represent you, to reinforce the realtor/client relationship in all the best ways. We look forward to serving you for another 40 years, one client’s story at a time.

Peggy Slappey Properties, Inc. is a Metro Atlanta real estate brokerage celebrating just over 40 years in business.  From new home construction to resales and so much more, we are Georgia’s most service-centric real estate company. Our topmost goal is to enrich the lives of those we encounter, one story at a time.  To see our current listings, visit www.psponline.com and call us for expert advice at 770-271-5555.  Keep up to date with the latest PSP events and offers by checking in on Facebook, Instagram, LinkedIn, and Twitter.

This blog post and information it contains, including but not limited to plans, pricing, financing options and available incentives, may change without notice. Please contact a PSP Realtor for the most up-to-date information.

August 27, 2024