The rules for buying and selling a home in Wisconsin have changed. Here's what to know about how it affects your money.

MILWAUKEE - Wisconsinites need to do more homework before buying or selling their home, after major rule changes in the residential real estate market took effect in August .

The way real estate agents get paid is changing, requiring buyers and sellers to make big decisions early on. Those much-anticipated changes are the result of a lawsuit against the National Association of Realtors , which settled last spring.

Realtors, along with some homebuyer advocates, worry the new rules could be yet another source of stress and financial strain for first-time homebuyers, who are already facing a hyper-competitive market.

Industry critics, however, say the changes are long overdue — and will ultimately put money back in the pockets of buyers and sellers alike.

Here's what buyers and sellers need to know:

Big picture: What's changing and why?

The settlement upends the longstanding compensation model in which sellers paid a 5-6% commission on a sale, which the seller and buyer agents split.

Critics argued this was a bad way to compensate agents for the work they do — and hurt both buyers and sellers in the process.

Buyers and their agents, critics said, had conflicting financial interests; the more a buyer spent on a property, the more their agent earned in commission. Sellers, on the other hand, say they feel pressure to offer the standard 5 or 6%, fearing that if they negotiate a lower rate, buyer's agents will keep their clients away.

More on Home Sales Changes: Residential real estate was confronting a racist past. Then came the commission lawsuits

Buyers will be asked to sign on the dotted line even just to tour a home

Realtors will ask you to sign one of three agreements, even if you just want a tour: A pre-agency showing agreement, a broker's disclosure to customers or a buyer's agency agreement.

If you just want to tour homes right now and do not yet need or want an agent's advice, you'll be asked to sign a pre-agency showing agreement with an agent that doesn't bind you to much. It can involve a set fee per home they show you, though.

This is a change from the old way of doing things, when buyers could tour properties and get to know real estate agents before anyone asked them to sign anything. Previously, that informal relationship could last until the buyer was ready to make an offer on a home.

Buyers who really do not want to sign anything can either attend open houses or can contact the listing agent to schedule a tour. Realtors so far have erred on the side of caution, so the listing agent still may ask you to sign an agreement anyway.

Buyers will set their agents' commission in advance

Realtors say these changes won't seem as drastic in Wisconsin, where state-approved seller and buyer contracts that include compensation details have already been in place since the 1990s.

But Don Moore, a Milwaukee-area broker and appraiser, said the changes to these contracts are still substantial. Previously, many buyers left compensation details blank — agreeing to pay whatever the seller offers. Now, they will have to agree to specific terms in advance.

Once they've agreed to have an agent represent them in negotiations, buyers will have to determine their compensation.

Consumer advocates recommend that buyers agree to a specific dollar amount, and not a percentage of the total sale price, to remove any potential conflict of interest.

Buyers and sellers will negotiate compensation. ‘There’s going to be math involved’

The NAR settlement terms require the national network of about 800 multiple listing services, where firms list homes for sale with other real estate professionals, to remove all offers of compensation from those listings.

The change means an agent can no longer see what they might get paid if their client buys a particular home. Yet offers of compensation can be included in promotions, social media posts and other places. It also will sort of force buyers and sellers to think about the compensation question and the many options available.

Sellers will have more choice in whether or not they offer to pay the buyer’s agent’s compensation. And just because they don’t offer to compensate the buyer’s agent doesn’t mean buyers can’t ask them to in a purchase offer.

“They may choose to not offer compensation but buyers may choose to include it. The seller has decisions to make. It’s up to their Realtor to explain the impacts of these different decisions,” said Megan Jacquet, vice president of sales for Coldwell Banker Real Estate Group.

It amounts to more flexibility for consumers, but those options all come with varying financial impacts that are important to discuss with your mortgage lender, said Tom Zellner, a senior vice president and retail sales manager at Green Bay-based Nicolet National Bank.

"There’s going to be math involved. There’s going to be more math involved to present offers and come up with the net (purchase) number. We’ll see different offers coming in with different concessions," Zellner said. "Banks need to know up front what those are so they can disclose and verify buyers have enough funds to get to closing."

Questions buyers and sellers should consider asking their real estate agent

The new disclosures, rules and requirements will give buyers and sellers more work to do ahead of sticking the 'for sale' sign in the front yard. Everyone agreed consumers should plan to have a frank, two-way discussion with a potential agent before they sign anything.

Here's some questions to help you get started.

• Do they get paid a flat fee or a percentage of the sale price?
• How is their compensation paid, by the seller or the buyer?
• What services do they provide for that compensation?
• How long does the contract last?
• Do they frequently work with specific buyers or sellers in your circumstances? Examples include first-time home buyers, luxury homes, or buyers with VA-backed or FHA-backed mortgages that come with additional requirements.

“The best way to make sure you have the right real estate agent is to sit down and talk to them. Ask them questions and expect that they’ll have questions for you,” Jacquet said.

Will these changes lower home prices?

It's unlikely in the short-term.

Some consumer advocates expect the changes will lead to lower agent fees , which in turn might reduce the overall purchase price. But Realtors and mortgage lenders said the ability to negotiate agent compensation will not change current market conditions in which demand for homes far exceeds the number of homes for sale.

Wisconsin Realtors Association CEO Tom Larson said compensation amounts could go up as buyers and sellers learn more about what their agent provides and face continued competition in the marketplace.

"None of these changes make transactions less complex, add more time in the day, didn’t add more inventory … which are the things that drive markets and pricing," Larson said. "There are things that may happen to pricing over time. You could see some Realtors who provide a really high level of service, their commissions could go up."

Consumer advocates see opportunities for buyers and sellers to try to lower costs

It will take time before the rule changes' impact on compensation can be determined, but the Consumer Federation of America (CFA) suggested ways buyers and sellers can educate themselves and try to save money.

• Buyers and sellers: Ask a prospective Realtor or agent for a copy of the contract and some time to review it with an attorney or independent adviser.
• Buyers and sellers: Try to negotiate compensation in dollars rather than a percentage of the sale price. CFA suggested a starting point of a dollar amount equal to 2% of the home sale price.
• Sellers: Don't include include an upfront offer to compensate the buyer's agent in your listing; wait to see whether buyers request you cover it or intend to pay their agent themselves.

For more information, the CFA has published a guide for buyers and a guide for sellers to help evaluate contract terms.

Relief for veterans with VA home loans

One significant concern mortgage lenders originally raised when the changes were proposed involved veterans.

The U.S. Veterans Administration (VA)-backed home loans offer veterans benefits like no down payment, lower interest rates and limited closing costs. The VA loans did not allow veterans to pay their agents' fees, though, which could have put veterans at a disadvantage under the new rules where sellers can tell buyers to pay their own agent directly.

The VA, though, has since March announced changes to its veterans home loan program that will allow buyers to pay their own agent fees, just like any other mortgage loan, Zellner said.

Terms to know:

• Buyer's agent : The Realtor or agent you contract with to help buy a home in exchange for specific compensation.
• Buyer Agency Agreement : This is a formal contract when you want to buy a home and have chosen the Realtor you want to represent you. The agreement is with the Realtor's firm (think Coldwell Banker or Keller Williams) and will clearly spell out commission, services rendered, timeframe, and other details.
• Compensation : What a Realtor is paid for helping you sell or buy a home. Commonly a percentage of the sale price or a set dollar amount.
• Customer : A formal designation that enables an agent who lists a home to also draft a purchase offer for you. The agent cannot provide you advice or opinions on negotiations or other properties.
• Client : A formal designation that means you have signed a seller's agent or buyer's agent agreement with a specific Realtor. They work with you to find homes, write purchase offers and strategize for agreed-upon compensation.
• Disclosure to Customers : An agreement between a Realtor and a buyer who does not have a buyer's agent, but wants to move beyond just looking. The agreement designates you as a "customer" for whom the Realtor can provide brokerage services, but won't discuss negotiation strategy.
• Offer of compensation : A home seller's offer of what they will pay a buyer's agent if their client buys the house. Also either a percentage of the sale price or set dollar amount.
• Pre-agency showing agreement : An agreement for buyers just starting their search. A Realtor will agree to show you multiple properties, but can charge you a fee per home they show. The agent will not provide advice on price or negotiating strategy. This agreement can be terminated whenever or it could serve as a precursor to a more formal agreement.
• Seller's agent : The Realtor or agent you contract with to sell your home in exchange for specific compensation.

Contact Jeff Bollier at (920) 431-8387 or jbollier@gannett.com . Follow him on Twitter at @JeffBollier

This article originally appeared on Green Bay Press-Gazette: The rules for buying and selling a home in Wisconsin have changed. Here's what to know about how it affects your money.