One of the biggest changes to how people buy and sell their homes is taking effect this weekend. That’s when the National Association of REALTORS has told all of its members to start using the settlement terms in the federal court case accusing most real estate brokerages of violating the Sherman Anti-trust Act.
Multiple changes must be implemented by real estate brokers, almost all dealing with compensation and transparency in the compensation of brokers.
The biggest change is in how buyers are compensated, and it is something that anyone looking for a house needs to know.
If a home is closed after August 17, the buyer must pay their agent directly with out-of-pocket costs, eliminating how the buyer and the seller were paid during the closing of the home.
The Orlando Law Group has been following this issue since the beginning with detailed articles found here and here.
While having a personal agent work with you on finding your dream home can be very beneficial, with this ruling, utilizing the services of a proven residential real estate attorney can be a way to offset the costs of buying a home.
The attorneys at The Orlando Law Group understand this type of transaction as we are also licensed real estate agents. We work with local real estate agents and their teams on a wide range of services, including contracts and closings, but also with individuals who need assistance and are here for you.
What is changing?
The good news is that real estate brokers have had plenty of time to adjust. In May, the National Association of REALTORS announced the changes that needed to be made by brokers.
As reported by REALTOR magazine, here’s what needed to be changed:
- Eliminate and prohibit any requirement of offers of compensation in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives.
- Retain and define “cooperation” for MLS participation.
- Eliminate and prohibit MLS participants, subscribers and sellers from making any offers of compensation in the MLS to buyer brokers or other buyer representatives.
- Require the MLS to eliminate all broker compensation fields and compensation information in the MLS.
- Require the MLS to not create, facilitate or support any non-MLS mechanism (including by providing listing information to an internet aggregator’s website for such purpose) for participants, subscribers or sellers to make offers of compensation to buyer brokers or other buyer representatives.
- Prohibit the use of MLS data or data feeds to directly or indirectly establish or maintain a platform of offers of compensation from multiple brokers or other buyer representatives. Such use must result with the MLS terminating the participant’s access to any MLS data and data feeds.
- Reinforce that MLS participants and subscribers must not, and MLSs must not, enable the ability to filter out or restrict MLS listings that are communicated to customers or clients based on the existence or level of compensation offered to the cooperating broker or the name of a brokerage or agent.
- Require compensation disclosures to sellers, as well as prospective sellers and buyers.
- Require MLS participants working with a buyer to enter into a written agreement with the buyer prior to touring a property.
That is a significant number of changes, including the wording of contracts and marketing materials.
Buyer’s Agent Compensation at the Forefront
Historically, a buyer’s agent was compensated by the seller’s agent by splitting commissions between the buyer and the seller. On a $400,000 sale price, this could mean a commission for the seller’s and buyer’s agents of more than $10,000.
For most buyers, this seemed like a good arrangement. The money that was paid to the agent was taken out of the sale proceeds, so the buyer never truly saw any additional costs, other than what was in the sale price.
Now, the buyer will be on the hook for thousands of dollars in addition to the home price. Of course, the offer to buy a house could be lower, but The Orlando Law Group provides a different option.
What are a home buyer’s options now?
As we stated when the settlement was first made, the options seem to be limited now. With the new laws, buyers can:
- Agree to pay the agent directly for a preset cost,
- Negotiate with the seller to cover the buyer’s agent fee, similar to credits for closing costs,
- Hire an experienced real estate attorney, or
- Try to negotiate the purchase of real estate unrepresented.
We hope that no one tries to negotiate without representation. The process of buying a home should be trusted to a professional and an experienced real estate attorney may be your best bet.
No, a real estate attorney will not scour the internet looking for your perfect home. Most of the buyers we know are already doing that, looking at listing services for homes they like.
A real estate attorney can, however, negotiate the terms of your sale. They can help ensure you are covered for unforeseen circumstances in the sale contract. They can perform all the duties required at closing, that you will be paying for anyway.
The best part? The fees paid to an experienced real estate attorney, like those found at The Orlando Law Group, are a fraction of what would be paid to a real estate agent.
The attorneys at The Orlando Law Group can help homebuyers in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on August 13, 2024 by The Orlando Law Group
