The moment you’ve been waiting for is here: Real estate practice changes are taking effect, and it’s time to implement them in your business—if you haven’t already. The National Association of REALTORS® has been hard at work preparing the industry for these changes. Take the time to jog your memory or familiarize yourself with new requirements regarding written buyer agreements and communicating offers of compensation. At facts.realtor, NAR’s hub for resources and information related to its proposed settlement agreement, you’ll also find home buyer and home seller guides to the practice changes that you can share with your clients.
To get a refresher on how the practice changes may shift your business operations, consult this quick guide to practice changes. Also, be aware of what the practice changes may look like practically during a transaction. Here’s a summary of what you need to remember:
- Compensation remains fully negotiable by buyers and sellers and their agents.
- Remind consumers that when they’re searching for an agent to work with, they should ask questions about compensation and understand what services they are receiving.
- Practice change: Buyers must sign a written agreement with their chosen broker before touring a home—whether in person or live virtually. The agreement will reflect the terms they have negotiated with their agent, including what services will be provided, for how much and how the agent will be compensated.
- If sellers have not offered compensation, buyers can request in their offer that sellers compensate the buyer broker. If the seller is not paying buyer broker compensation, the buyer will be responsible for paying their agent if agreed to in the written agreement.
- Buyers do not need a written agreement when just speaking to a listing agent at an open house or asking them about their services.
- Current regulation does not allow agent commission payments to be financed as a part of a mortgage.
- Practice change: The listing broker or the seller may offer compensation to the buyer’s agent, but there are limitations to how that offer can be marketed—i.e., brokers can no longer communicate offers of compensation on an MLS.
- Practice change: If there is an offer of compensation to a buyer broker from a listing broker or the seller, the seller must approve the specific amount or rate of payment in writing.
- The changes further empower consumer choice through transparency.
- Agents who are REALTORS® are ethically obligated to work in the client’s best interest.
Looking for even more guidance on the practice changes and their impact on your clients’ transactions? Use these resources, including videos and articles.
The Legal Landscape of Practice Changes
NAR’s “Window to the Law” video series, which offers tips regarding various legal concerns in the real estate industry, has special Q&A episodes on settlement facts. Covering changes to listing agreements, written buyer agreements and seller concessions, among other topics, this series digests the facts and gives you best practices to keep in mind.
FAQs That Matter to You
You’ll find answers to many of your queries and those of your customers about the practice changes in this comprehensive list of frequently asked questions at facts.realtor.
Compensation, Commission and Concessions
While you are immersed every day in discussions about how your real estate services fee is paid, it’s important to review the different ways agents and brokers can be compensated as well as how each is—or is not—changing because of practice changes. Check out this overview of compensation options.
Consistency Matters in Compensation Talks
You know the best way to provide equal service is to be consistent in your business practices and how you treat each client. That’s key as you endeavor to address your compensation with the buyers and sellers you serve. Understand why you need consistent policies and procedures for handling compensation negotiations.
Answering Questions About Your Compensation
The process of establishing a written agreement with a consumer is a prime opportunity to explain what you do as a real estate professional and the value you bring to the transaction. Keep in mind that selling the value of an intangible service such as yours may take extra thought and explanation.
Agents Lean in on Value—and Their Clients See It
While you need to explain to consumers what you do as a real estate professional, nothing beats showing rather than telling. Be prepared to demonstrate your understanding of your clients’ goals through action. Learn how two agents are doing it.
4 Questions on Practice Changes for eXp’s CEO
Since becoming CEO of eXp Realty in April, Leo Pareja has put one task above all others: ensuring that eXp’s 72,000 U.S. residential agents are prepared for the Aug. 17 practice changes. For Pareja, a 22-year real estate veteran, shifting to a new reality isn’t so new.
Compass CEO: Agents Aren’t Going Anywhere
“While there’s been plenty of speculation about how the rule changes will impact the industry,” writes Compass CEO Robert Reffkin in a new RISMedia op-ed, “one thing is certain to me: Consumers will always want to have a skilled, dedicated professional by their side to help them fulfill their dream of owning a home and finding their place in the world.”
