New Rules for Real Estate Transactions
There is a lot of talk about the new changes in Real Estate Rules due to the recent Anti-Trust legislation that went into effect in August 2024. There are many misconceptions and confusions about the new “rules”. I will try to succinctly but accurately explain the new rules. I apologize for the length of this email.
Please note that every state has their own regulations for Real Estate Agents/Brokers/Realtors. These can vary significantly by State. However every Real Estate Agent/Broker who is a member of the National Association of Realtors (called a Realtor) must abide by the rules of the Settlement Agreement.
Essentially, there are 2 main changes in the way Realtors work with their clients.
1. Clients (Buyers or Sellers) must now sign a contract with the Realtor, which will clarify and document if the Buyer or the Seller or the Seller’s Agent will pay the Buyer compensation. This is negotiable amount agreed between the Client and the Realtor.
In Colorado, Seller’s and Buyer’s always signed a contract. In fact for as long as I have been a Realtor, both the Buyer Agreement and the Seller Agreement contracts varied between 5 and 8 pages and clarified compensation amount to the Realtor as well as the duties to be provided by the Realtor.
Traditionally it was common for the Seller’s to pay a Commission to their Agents, who would then pay some portion of that amount to the Buyer’s Agent. There was never any required amount.
Under the new rules, a Seller can still opt to pay an amount that will go towards the Buyer’s Agent.
However the Buyer must now sign a specific contract with their Realtor stating the amount of compensation that the client agrees to pay to compensate their Realtor, as well as the services that the Realtor will provide, and whether or not the Realtor will have a FIDUCIARY relationship with the Buyer. This contract must now be signed before any homes can be shown by the Buyer’s Realtor. This contract can be for one specific home or a variety of homes and also will specify the duration of the contract. These terms are always negotiable between you and your Realtor.
2. The Seller’s Realtor can no longer list the amount (if any) that the Seller is willing to pay to the Broker’s Realtor in the MLS. They are still allowed to provide compensation, and they are allowed to publicize the amount (if any) wherever they want, except in the MLS. Basically this means I have to call the Seller’s Agent to find out if the Seller will provide compensation and if so, how much.
What this means for you as a buyer.
As always, you decide whether or not you want to have a Buyer’s Agent assist with your purchase.
If you decide you want to go it alone, I can recommend some youtube videos. I will always advise you to hire a lawyer. You are also welcome to continue to view and search listings on my website.
If you want an advocate and an advisor on your side, give me a call. In my opinion the most important thing a Buyer’s Agent does is to have a FIDUCIARY relationship with you. A fiduciary relationship is what a lawyer has with his/her clients and means that I must act in your BEST Interests. For more details, give me a call or check out the fiduciary section of my website.
I have never pushed, now would I ever push, a client to buy a specific home, certainly never taking into consideration which home would provide more compensation of me.
I have never pushed, now would I ever push, a client to buy a more expensive home over a less expensive home. It is all about which home suits you better and fits in your financial means.
I have never pushed, now would I ever push, a client to ignore inspection items, just to get a sale.
I have never pushed, now would I ever push, a client to eliminate protections from a Purchase Contract, such as appraisal, loan contingency, inspection, survey, and other contingencies.
Bottom line, is that I never push my clients. Instead I listen to what they want.