National Association of Realtors (NAR) Settlement Information

August 17, 2024 is the key date by which all changes need to be in place and I would like to talk about how it will affect buyers and sellers. 

First an important disclaimer from all Real Estate organizations: Broker compensation is not set by law nor fixed, controlled, recommended or suggested by the Association of Realtors, MLS or any listing service.  Broker compensation is fully negotiable and brokers independently determine their fees.

In the simplest terms, the 2 key changes are 1) the removal of any reference to buyer agent compensation paid by the seller in our current MLS system and 2) that all buyers must sign a representation agreement with an agent before that agent is legally authorized to show them any homes for sale.  What does this mean?

The removal of the buyer’s agent compensation from MLS is intended to highlight the  conversation about who pays for the services of a buyer’s agent.  Our existing buyer representation agreement has always noted that the buyer agent works for compensation.   This agreement states how much the negotiated compensation will be and clearly points out that if the seller does not satisfy the amount agreed to the buyer will make up the difference.   So what changes?  Theoretically nothing, but this change makes it crystal clear that the buyer may have to compensate their agent for their services, and it drives an important conversation about what value your agent provides.

The seller may still provide buyer agent compensation, but this information is no longer readily available in the MLS system.  So how do buyers know the amount?  This will depend upon the listing agent.  Our brokerage builds custom websites for each property and we post this information on the website for each individual property.  We realize that buyers will have a vested interest in this information as they decide which properties to view and which properties to potentially purchase.

Regarding the 2^nd change – all buyers are now required to sign an agreement before seeing homes with an agent.  This leads to some necessary and important conversations.  In practice, most brokerages have always required a signed buyer representation agreement prior to any showings because it provides protections for the buyer and agent.  It protects the buyer by ensuring she is covered by the fiduciary duties of her agent including confidentiality.  Did you know that if a buyer chooses to work with a buyer’s agent without a signed representation agreement that agent technically works for the seller?  They must treat the buyer fairly and honestly, but they are able to share all information with the seller and the listing agent about the buyer’s thoughts and opinions!   

So you want to see a home but are not sure which agent you want to select?  Here are a few options.

1. The Texas Association of Realtors has come up with a ‘Short Buyer Rep’ form (TXR-1507) that allows an agent to represent a buyer for ‘Showing Services’ only. The buyer and agent can agree to a monetary amount for these services and the buyer is not obligated to that agent for anything beyond those showing services.  Please note this form is new and may change as business practices are established over the next several months.
2. The buyer can wait for Open Houses or call the Listing agent to discuss setting up a showing. The buyer would still be obligated to sign the ‘Short Form’ with the listing agent, but if you only want to see a couple of homes this may be reasonable. FYI, at our brokerage we do 3D virtual tours for ALL our homes with the intent of allowing buyers to preview the home before making an appointment. Please check to see if the listing agent has done the same for the home you are interested in.  You should be able to qualify (or disqualify) a home with the 3D tour quickly before making an appointment with the listing agent
3. You can seek referrals for great agents from friends and colleagues and interview 1,2 or more of the ones that are recommended. Have each agent clearly define their value and the services they will provide.  Ensure they have experience in the area where you are looking to buy.  Ask about their experience and negotiating skills.  Find someone that you know will add value.  It is not unusual for a seller to interview 1,2 or 3 listing agents before making an informed decision as to who will represent them.  A buyer should do the same!  This is an expensive and very personal purchase and the right agent will add a tremendous amount of value. 

As a final thought, the entire Real Estate industry and its code of ethics was borne from a need to protect buyers and sellers in an expensive and complicated transaction.  Compensation is understandable and expected for valuable services. Seek out and find great agents who you can trust and who clearly add value.

If you would like an individual consultation, whether you are a buyer or a seller, please call or text me directly (214.914.8430) to schedule a discussion.