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As of August 17th, the way you work with your real estate agent is changing. Back in March, the National Association of Realtors (NAR) and home sellers in a class-action lawsuit in Missouri agreed to settle litigation regarding agent commissions. Part of the settlement that takes effect on August 17th calls for a higher level of transparency regarding the costs of working with a real estate professional. Per the new NAR policy, Realtors will be required to enter into written agreements with buyers regarding their compensation for their services before being able to tour a home with a buyer.
It should be noted that Tennessee Realtors and their members have practiced buyer agency since 1996, but prior to the settlement, only 18 states had this practice incorporated into their policies. That means that Realtors and clients in Tennessee will experience fewer adjustments than their peers in other states. Realtors in Tennessee have, for decades, already disclosed the amount and method of compensation to both buyers and sellers if the Realtor used the forms provided by the state association.
The change that will be felt by buyers in Tennessee is that this disclosure and agreement is now required to be made in writing before Realtors can provide a tour of a property to a buyer. While this may seem to be a complication for buyers who may be just starting to shop for a home or who may be casually looking at property, it does preserve the choices that consumers have regarding real estate services and compensation. It also ensures that the buyer understands exactly what services will be provided, and for how much.
There are a couple kinds of agreements buyers may choose. One type is an agreement that establishes expected services and compensation between the buyer and the agent, and another establishes the services, compensation amount and confirms the agent as the buyer’s representative in the transaction. Buyers will want to contact their own trusted real estate professional to find out which type of agreement may be best for them, depending on the type of service they need.
Another change resulting from the settlement is that buyers may need to pay their own agent for assistance. Before the settlement, it was quite common for the buyer’s agent to be offered compensation by the seller and the listing agent, and this is still an allowable practice. Going forward, buyers can request that sellers pay a cooperating compensation to the buyer’s agent, they may choose to pay their own agent, negotiate their agent’s fee as part of their offer to purchase a home, or there may be opportunities to take advantage of seller concessions to assist with compensation for their representative.
If your agent has been learning, following, discussing and planning for the changes taking effect on August 17th, then they will be able to guide you through the changes.
*This article was reprinted with permission from the Knoxville News Sentinel August 11, 2024 Edition.
