Page 12 - June 2024 Issue Website

Dollars anD sense by Tolbert Rowe

New Rules for Real Estate Agent Commissions

Since the beginning of time, or at least of attention has drawn the ire of sellers agreed to this as a condition of
since real estate transactions came to many consumer groups, courts, and listing the home in the MLS.
fruition, buyers and sellers have been the US Department of Justice. This
assisted in the transaction by real attention has stimulated these entities A class action lawsuit in Missouri in
estate agents. Sellers in the transaction to initiate legal action against real October 2023 against NAR brought
paid the commissions or fees of both estate companies and the National the entire real estate industry to a
the agent who represented them Association of Realtors (NAR). point of radical change. The judge
AND the agent who represented found that the current practice
the buyer. This fee usually is 5%-6% In response to these legal challenges requiring sellers to pay the buyers’
of the purchase price and is split of the last several years, most real agent as a condition of including the
equally between each agent, unless estate brokers have required buyers property in a MLS violated anti-trust
otherwise negotiated. In July 2024, to sign a disclosure before showing laws, discourages competition, and
this arrangement is going to change. property to them whereby the buyer locks in higher commissions and costs
client was required to acknowledge to consumers.
Under the current system of that they would be “responsible” for
compensation, sellers are required payment of a commission, usually To settle this lawsuit, NAR agreed
to consent to pay the buyers agent 2.5%-3% of the purchase price of a to pay $418 million in damages and
commission as a condition of having home, to the buyers’ agent. eliminate the rule that requires sellers
their property listed in a Multiple to agree to pay buyers’ commissions
Listing Service (MLS). The MLS is But, because the buyer agent would to be included in an MLS. Sellers
the central location where real estate only be showing properties to will be prohibited from paying buyer
agents access information about potential buyers that were listed in agent commissions unless otherwise
homes that are on the market, status the MLS, (where sellers had agreed to negotiated in a contract of sale.
of pending sales, and a plethora of pay the buyers’ broker commission) Buyers of real estate will be required
other information about real estate buyers would not have to worry to enter into an agreement with their
sales in the local market. In 2023, 88% about paying their real estate agent’s agent whereby they agree to pay a fee
of all sellers had their home listed in commission. The real estate agent to their agent/broker. This fee can be
the MLS. could truthfully disclose at the time
that the buyers signed the agency a percentage of the purchase price of
It is widely recognized that the agreement that although they are a home, as it is now, or it can be a flat
United States has some of the technically responsible for payment of fee or an hourly rate. Regardless of
highest real estate transaction costs their agent’s commission, any contract how a buyer agent/broker elects to be
compared to most other developed they enter into will “require” the seller compensated, they will be required to
countries in the world. This kind to pay the buyer commission. The list what services they will provide for
the fee that they will receive.

“Your Mortgage Consultant Since 1985” The real estate industry, and many
others, have expressed concern that
putting buyers in a position where
Purchase or Refinance they must pay for their agents services
will put many buyers, especially
first-time buyers, at a distinct
disadvantage. It is hard enough for
first time home buyers to accumulate
the financial resources necessary to
115 E Dover St. Ste 3 - Easton, MD purchase a home without having the
tolbert@baycapitalmortgage.com C. Tolbert Rowe, burden of paying their agent too.
www.baycapitalmortgage.com NMLS Vice President/Lending
182844 Many first-time buyers will be forced
to ask the seller to provide them a
410-819-3005 / cell 410-310-3520 seller credit to offset the cost. This

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