Joel Foster is a Multimedia Journalist at KGUN9.
A class action lawsuit settled this summer between the National Association of Realtors and various plaintiffs has led to significant changes in the homebuying process.These changes, effective since August 17, are aimed at increasing transparency regarding real estate agents' compensation.
However, the settlement has also brought confusion among homebuyers about what to expect.Before the new rules, a seller would typically list the buyer’s agent’s compensation on the Multiple Listing Service , with the fee often being around 5 percent of the home’s sale price, split between the buyer’s and seller’s agents.The settlement eliminated this practice, with compensation no longer being posted on the MLS.David Dynes, a designated broker with Tierra Antigua Realty, says that some of his clients are anxious about the new rules.'There was a lot of just uncertainty, anxiety about what was going to happen,” Dynes said. “A lot of misunderstanding out there about how it would impact potential buyers and sellers.'However, Dynes says that the changes are actually quite minimal and are unlikely to pose a large impact on homebuyers. In fact, he says the new rules provide more transparency in understanding how real estate agents and brokers are paid.One of the key changes is the requirement for a formal buyer employment agreement, which must be signed before a prospective buyer can view a property. This agreement clearly outlines how the real estate agent will be compensated.Dynes sees this change as a step toward greater clarity in the process.'It explains how we’re paid and how much we’re paid,” he said. “You know what you’re getting into upfront versus it being sometimes an afterthought.'Despite the headlines that have sparked concern, Dynes emphasizes that the changes are relatively minor. The compensation structure is still negotiable, and sellers may still choose to cover the buyer’s agent's fee.Deborah Breslin, a designated broker with Realty ONE Integrity in Green Valley, agrees, stating that the agreements make the compensation process more transparent.'We are professionals and we’re providing a service,” Breslin said. “As such, we make a living by being compensated just as someone would go to work and make an hourly wage.'Breslin says that her agency, and many other realtors, already focused on being transparent in how agents are paid. She also stated that agent and broker compensation has always been negotiable even before the new rules went into effect.“So it wasn’t a change,” she said. “It was an adherence to communicating about compensation for professional services.”She cited the confusion over the rule change as a reason why it’s important for Realtors to educate their clients throughout the entire home buying process.“We’ve always advocated proactively the practice of the options that are given to our clients the minute we sit with them and have that relationship start,” Breslin said. “This includes talking about what the contract says, what is our agreement going to be. It’s no different than any profession.”Dynes says that misinformation regarding the changes makes it that much more crucial to engage and ask questions from your agent.“The key thing is to talk with your agent about what your relationship is, how they’re being paid and what they’re being paid,” he said. “Your agent should be educating you throughout the process.”Final court approval of the settlement is expected in November.
NAR Class Action Suit National Association Of Realtors Settlement Realtor Compensation Changes Buyer Agent Employment Contracts Real Estate
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