New Real Estate Rules: Buyer Contracts and Commission Clarity

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As of this weekend, new regulations from the National Association of Realtors (NAR) are set to transform the real estate landscape. The changes, driven by a historic $418 million antitrust settlement, redefine when and how buyer contracts are required, impacting how commissions are negotiated and disclosed.

Key Changes in Buyer Contracts

Under the settlement, realtors must secure written agreements with buyers before any home tour. However, this requirement does not extend to open houses or initial property viewings arranged directly with listing agents. Simply interacting with buyers or marketing to them does not necessitate a contract unless actual brokerage services are provided—such as arranging viewings or negotiating offers.

For agents involved in dual agency—representing both buyer and seller—a written contract is required from the start. This ensures clarity on roles and responsibilities before any home tour occurs. Importantly, these agreements need to detail compensation terms clearly, avoiding vague or open-ended clauses.

Impact on Homebuyers and Agents

The shift aims to enhance transparency and allow for better negotiation on commissions. While the changes might initially complicate the buying process with additional paperwork, they promise greater clarity in how agents are compensated. The new rules are designed to prevent hidden fees and ensure that compensation agreements are clear and upfront.

Adapting to the New Rules

For existing agreements, agents should update terms to comply with the new regulations. If current contracts specify compensation through MLS listings, adjustments will be necessary to align with the new policy prohibiting such offers.

As the real estate market adapts to these changes, both buyers and sellers will need to navigate this evolving landscape with a clearer understanding of their agreements and compensation structures.