A recent National Association of Realtors settlement could impact how you buy and sell a home.
The legal agreement is expected to change the commission agreements for agents. The president of the Buffalo Niagara Association of Realtors says for decades people selling their homes have been responsible for a five to seven percent commission split between their agent and the buyer's agent. But a Midwest jury recently ruled that this traditional process can drive up home prices and encourage buying agents to steer their clients toward more expensive homes.
The verdict means the commission should no longer automatically include compensation for a buyer's agent. It gives sellers more negotiating power over the commission. Buyers can also work out their rate with their agent, or *skip* the agent altogether.
"What the courts are looking at is, is the consumer being communicated with properly," explains The President of the Buffalo Niagara Association of Realtors, Vienna Laurendi. "They started to question why are we paying somebody who doesn't represent us. Number one, why are we paying them, and number two, why did they make more than the agent that we hired?"
Laurendi says this ruling will not only change the commission structure but will also impact the multiple listing service.
"Up until now we've been publishing in the multiple listing service what the seller is willing to compensate a buyer's agent for and that's going to be just eliminated entirely," said Laurendi."So, if a buyer's agent going forward wants to be compensated from the transaction outside of their own buyer paying them they will have to negotiate that with the listing agent and the seller. Commissions have always been negotiable."
She explains, "During the contract signing, your broker is going to explain to you that you've got a choice. The buyer's agent has the opportunity or the buyer's agent is going to potentially ask to be compensated through the proceeds of the transaction and you have the opportunity to say yes or no."
Laurendi says the changes are expected to take effect by July.
"Keep in mind the settlement has not been accepted yet by the courts. We actually do hope that it does get accepted so we can implement our changes immediately," said Laurendi.
The Buffalo Niagara Association of Realtors plans on implementing buyer-broker agreements as a standard of practice across the board, according to Laurendi.
