LEE COUNTY, Fla. — Some major real estate changes start on Saturday, and it could impact buyers and sellers. The biggest change: if you want to tour a home, you have to sign a buyer's agreement first.
This is because of a $418 million settlement with the National Association of Realtors (NAR). Fox 4 Senior and Housing Reporter Kaitlin Knapp went to Armada Real Estate and talked to realtor Arianna Falzone to help you better understand the changes.
Fox 4 Senior Reporter Kaitlin Knapp explains the new rules here:
Let's start with touring a home. You need to sign a buyer's agreement before stepping into a home. The agreement will need to lay out specific details.
"Specifying the exact amount that they [realtor] would be paid whether in a percentage or a gross amount," Falzone said.
It will also have the exact commission offered, a statement saying it's negotiable, the length of it, which properties it's for and potential compensation.
"It's going to weed out those buyers that aren't necessarily serious about getting into the nitty gritty of buying a home," Falzone said.
NAR says this will not apply to open houses if you are going in to speak to an agent.
Then, there's another change: commission.
"We are supposed to make sure that a seller is aware that commission is negotiable," Flazone explained. "However, a lot of people were telling sellers that they mandatorily had to offer a commission to a buyer's agent."
With the ruling, realtors are required to tell the seller it's negotiable.
"The whole entire settlement is actually try to mitigate the issue of people setting community standards and industry standards for a seller to actually issue a commission to a buyer’s agent," Falzone said.
She says a seller does have the right to not offer a commission for a buyer's agent, but most of the time it's added into the listing price.
Falzone says with the new ruling, sellers will likely become more aware that the commissions are negotiable.
"If they're not offering that commission, they just might choose to not offer it anyways and still push for a harder deal and get more money," she said.
But figuring out a home's commission and compensation isn't going to be easy to access.
The ruling says it's no longer required on the MLS — the database for homes on sale.
Before the ruling, Falzone said there were accusations of unethical actions being taken by some agents.
"Some agents were choosing not to show a home if it was under "X" percent that was being offered," she said.
Because the information is not on the MLS anymore, it has to be a conversation between the agents.
All of the changes are anticipated to affect buyers and sellers.
"It definitely puts buyers in a more harsh situation in order to afford a home," Falzone said.
This is because you may have to set aside money for commission, since the seller may not add it into the purchase price anymore.
For example, Falzone said if you have an FHA loan for a $300,000 house, you will need to put down 3.5%. Take into account 3% in closing costs and now potentially commission, you could be looking at close to $30,000 up front.
However, she sees some positives.
"The pros for a buyer is knowing exactly what you’re working with the moment that you step foot inside the door," Falzone said.
For sellers, it depends on how you look at the changes.
"So this can definitely give you more power in negotiating your commission with your listing agent and whatever you would like to provide to a buyer's agent," Falzone said.
She says it's about transparency and you can save money by not offering a commission.
However, will these changes cause buyers to scale back?
"I don't necessarily think that it will stop buyers from coming to the market," Falzone explained. I do think it will be a little bit harder to afford a home and actually come to market and buy a property when you have additional fees to consider."
What about the people who were told they had to pay for commission?
"Those people that were under the impression that commission was non-negotiable and was a mandatory thing that you had to offer, there are still opportunities where they can get a slice of the pie from that settlement," Falzone said.
You can do that here.
