What some are calling the biggest change in the real estate industry in years.
Starting Saturday, if you're in the market for a home, you'll first need to negotiate with and sign an agreement with a realtor before looking at homes.
"In the past buyer agent compensation was guaranteed through the MLS, now buyer agent compensation will be negotiated between the buyer and their agent, and the buyer will be asked to sign a form that locks in the compensation prior to going out and looking at houses with the realtor," said JP Shamshoian, Realty Concepts CEO.
In the past, compensation would come from the seller and be discussed towards the end of the process. But that's all going to change as commission will be negotiated up front. The agreement will spell out how much the realtor will be paid and the services they will provide.
"You're driving around a neighborhood looking for a property that you want to buy you see a 'for sale' sign you call that realtor, and you say I'd like to look at the house today at 4 o'clock could you meet up and show it to me now? Every realtor in the United States will say I love to show you that property, but we have to meet before we take a look at it, go over some paperwork, and you're going to sign up broker agreement," said Brian Domingos, Board Member Fresno Association of Realtors.
This change came after sellers argued that it was unfair to compensate the people on the other side of the transaction, they sued, and The National Association of Realtors agreed to settle and pay $418 million, and abandon making sellers pay for both agents.
During this, they did not admit wrongdoing.
Brian Domingos, Board Member on the Fresno Association of Realtors calling it unnecessary.
"We would disagree with the result of the lawsuit. We are confident that our processes which are time tested have helped people build wealth for decades were sound and something that we wouldn't have to change," said Domingos.
Domingos worries that first-time home buyers may get discouraged, which will only worsen California's housing crisis.
"I think the risk for the consumer is if they cannot afford a realtor while they're looking to make the largest purchase of their entire life. They're a first-time homebuyer, or a veteran, they don't have a lot of extra funds. It puts them in a challenging position to find a property," said Domingos.
Local companies have already spent hundreds of hours in training to prepare for this shift.
JP Shamshoian, CEO of Realty Concepts, believes these changes will ultimately benefit consumers.
"I think that the best agents are really going to thrive, and I think the agents that are maybe just hanging on might have a little bit harder time," said Shamshoian.
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