Real Estate’s Big Shift: What the New Compensation Rules Mean for Buyers and Sellers

Photo byNational Association of Realtors

The real estate landscape is undergoing a transformative overhaul starting August 17, with new rules set to reshape how buyers and sellers handle compensation. Here’s a streamlined look at what these changes mean for everyone involved in the real estate transaction process.

The Shift in Broker Commissions

Gone are the days of automatic commission structures. Under the new settlement agreement, commissions—though still negotiable—must now be clearly defined in written agreements between real estate agents and their clients. This marks a significant shift from the previous norm where commissions were often loosely understood and rarely documented in detail.

Buyers and sellers will need to agree on a fixed amount or percentage for commissions upfront. Open-ended ranges are now a thing of the past. This change aims to enhance transparency and ensure that both parties know exactly what to expect.

New Rules on Compensation Offers

Previously, offers of compensation for buyer’s agents could be listed on Multiple Listing Services (MLS). The new rules change this: compensation offers must now be communicated through other marketing channels like flyers, emails, and brokerage websites, but not on the MLS.

This update is designed to broaden access to real estate services, especially for those who may struggle to cover the costs of agent representation upfront. By keeping compensation details off the MLS, the settlement aims to foster a more equitable environment where buyer representation remains accessible and fair.

Seller Concessions: What’s Allowed?

Seller concessions—where sellers cover some of the buyer’s costs—will continue to be a part of transactions and can still be listed on the MLS. However, these concessions cannot be directly tied to payment for buyer agents. This change is intended to separate transaction costs from agent compensation, further clarifying the roles and responsibilities of all parties involved.

Embracing the Changes

As we approach the implementation date, it's essential for all stakeholders—whether buyers, sellers, or brokers—to understand and adapt to these new rules. The emphasis on clear, upfront agreements and transparent compensation aims to empower consumers and streamline the homebuying process.

The driving force behind these changes is to provide consumers with greater clarity and control over their real estate transactions, promoting fairness and reducing ambiguity in how agents are compensated.