You may have read the headlines and seen some misinformation about “6% commissions” and the National Association of Realtors (NAR) lawsuit and settlement, so let’s go over the facts and how it pertains to our local home buyers and home sellers here in Connecticut!
NAR is the world’s largest professional real estate organization with its own code of ethics, standards and practices, and offers certificates and classes for its members. All of our team agents are a part of NAR.
The first main point: buyers agency agreements now have to be signed in order to tour homes. While this is national news, in Connecticut, a buyer has been mandated to sign representation paperwork or an unrepresented buyer form since 1997. We are 1 of 18 states that have buyer’s agency, so this change won’t impact Connecticut as much as it might in the other 32 states. This puts an emphasis on buyer consultations and conversations. Luckily, our team has always done buyer consultations, town tours and has had in-depth in conversations about what our buyer clients are looking for in their next home, how we proactively help them find a home, and how compensation works. We’re excited that now ALL buyers will get the same care from their agent that we at the Pritchard Homes Team have been providing from the beginning!
Buyers agency agreements are between a buyer and their Realtor’s brokerage who they have chosen to represent and work for them. Buyer agency agreements are different for every buyer and the terms, commission and properties/towns can be discussed and negotiated.
There are still some unknowns, but gone are the days of just asking your Realtor friend to show you a home out of curiosity, which means more serious, educated buyers entering our sellers homes.
The big change is that offers of compensation to the buyer’s brokerage will no longer be guaranteed through the MLS. The Multiple Listing Service (MLS) is a system licensed Realtors use to search for homes for their clients, review tax records, find comps and it also displays co-broke commission; it’s also the back-end system Realtors use when putting listings on, which feeds into Zillow, Realtor.com, etc. As this moment in time, Realtors are able to see what a home seller is compensating a buyer’s agent brokerage who represents a buyer when purchasing their home. This will no longer be displayed come mid-July.
This commission change means that a buyer will need to negotiate a commission paid to their agent on their buyer representation form. If a seller is still offering compensation to the buyer’s agent (such as the way we are used to), the buyer can continue financing the buyer’s agent compensation like they have been since 1997. If the seller is not offering compensation to the buyer’s agent, there will be an additional cost incurred by the buyer. Every case and cost will be different, and it’s important to talk to your Realtor about options. We will break down the benefits of sellers offering out commission to prospective buyers agents in another blog!
What are some benefits for sellers to still offer compensation? As a listing agent, my focus is on marketing your home for top dollar. If sellers do not offer compensation to the buyer’s agent, they are eliminating a large pool of buyers that would be able to afford to buy your home, when the commission was financed in the total purchase price. Buyers might not be able to afford your home because of a potential cost they will have to pay their agent, when before it was baked into the purchase price.
One of the big headlines was that 6% percent commissions are gone. Commissions have ALWAYS been negotiable. When we sit down with sellers we go over our marketing, pricing strategies and discuss the benefits of co-broking with buyers agents, and that has resulted in a variety of commission structures. It all comes down to what type of service you are looking for. Discount brokerages have always existed, that is nothing new. Think of it this way – two of the most important costs in your life are your health and your home. Would you pay a discount doctor for a medical procedure? Or would you pay for a quality professional to ensure you were well taken care of? The same goes for the biggest sale or purchase of your life.
You know the old saying, “you get what you pay for.”
If you’re curious on how we help out buyers find homes (and I can assure you it’s not just waiting for a home to come on the MLS – our team does a lot of off-market prospecting, networking with other local Realtors, and so much more), we would love to sit down with you for a buyer’s consultation, town tour, and so much more!
If you’re selling your home, this news can seem like an added bonus for you, but let’s sit down and really break out the facts, the details, commission changes, how to best position your home, how to capture the most buyers, and your sale in this ever-changing market!
As one of our favorite Raveis educators, Christa Ross, said recently, this news will separate the “Pros from the Players,” and I know where we fall.
One final reminder – this is a proposed settlement that will potentially take effect in July and while many details are being worked out, this is still subject to change and we are all working towards a clear understanding of how to facilitate our transactions. Our clients are the most important piece here and we will continue to work for our buyers and sellers as we always have with honesty, transparency, professionalism, and care.