New real estate rules for home buyers and sellers statewide went into effect Saturday following an agreement the National Association of Realtors announced earlier this year.
The new rules would change the way commissions work.
At the close of the escort, a seller uses a percentage of their proceeds to pay over 6% commission, half of which goes to their own agent’s brokerage and the other half to the buyer. Agents then get a portion of the commissions paid to the brokerage.
However, a federal judge’s spring ruling found that NAR had conspired to artificially inflate commissions. The court said NAR required sellers’ agents to offer compensation to a buyer’s broker to specifically list homes on NAR-affiliated listing services.
Under the change, sellers can now decide whether to pay anything to the buyer’s broker and, if they choose to do so, decide how much. In addition, sellers’ agents can no longer advertise commissions to buyer’s agents on various listing services.
The change will also require agreements to detail exactly what commission the buyer will pay to his or her agent.
“The buyer and their agent are going to have to have a formalized agreement as the seller and the seller’s agent,” said Patrice Horvath, founder of Illuminate Properties.
Horvath said he doesn’t expect the change to affect the Bay Area market, where inventory is low and demand is high.
“I don’t see it affecting prices or the number of offers,” he said. “I don’t see it affecting that part of the market. I just see confusion.”
Real estate agents will now have to deal with 30 additional forms.
