What Every Buyer and Seller Needs to Know About Real Estate Commissions Post-2024
The world of real estate commissions has changed dramatically since August 17, 2024, when new rules from the DOJ and NAR lawsuit came into effect. If you're a buyer or seller, please watch the video or read on to lean what you need to know about navigating the new system.
Old Rules, Simplified
In the past, when a buyer purchased a home, the process appeared seamless. The sale proceeds went to the seller, who paid the broker, and the broker paid both the listing and buyer’s agents. However, what many didn’t realize was thatwatch this video the seller had already factored all commissions into the price of the home.
This meant that, in practice, buyers were always footing the bill for bothwatch this video sides of the transaction—even if it looked like the seller was watch this videocovering it.
New Rules, New Responsibilities
Under the new laws, transparency is key, and buyers now play a more active role in determining how their agent is paid. Buyers must sign an exclusive agreement with their agent, specifying the commission rate.
The buyer’s agent can then be compensated in one of three ways:
Buyer Payment: Buyers pay their agent directly, as outlined in their agreement.
Seller Contribution: Sellers might still cover a portion of the commission, baked into the sale price.
Shared Payment: A hybrid approach where the seller contributes a portion, and the buyer covers the rest.
This system allows for greater flexibility and customization, but it also means buyers need to carefully evaluate their budget and communicate openly with their agent about expectations.
What Does This Mean for You?
These changes mark a significant departure from the old way of doing things. Whether you're buying your dream home or listing your property for sale, it's essential to understand how commissions work to avoid surprises.
Partnering with a real estate agent who understands these shifts and can advocate for your best interests is now more important than ever.