How the NAR Changed the Way Buyers' Agents Get Paid

How the NAR Changed the Way Buyers' Agents Get PaidThe National Association of Realtors (NAR) exists to establish norms and expectations that advocate for realtors. As market conditions and the world around us change, sometimes the NAR makes changes in response. Their most recent change, which impacts how buyers' agents are paid, has caused some confusion and concern for potential buyers. 

If you're wondering how these changes might impact you as you search for homes for sale in Ellicott City, we want to help you see how this is actually a change that benefits both realtor and client. 

Understanding the Changes to the NAR Agreement

How the NAR Changed the Way Buyers' Agents Get PaidFor many years, realtors have been paid based on industry expectations, although they have technically always been negotiable. Generally, most real estate transactions result in a 6% realtor commission, with the sellers' and buyers' agents each making 3%. The changes essentially create more flexibility with this expectation. 

The NAR will no longer mandate that listing brokers on the MLS must offer upfront compensation to the buyer's agent. This shift allows for more flexibility in negotiating commissions and fees, empowering agents and buyers to reach mutually beneficial agreements.

With the new change, agents are required to enter into written agreements with homebuyers, clearly outlining negotiated commissions and associated fees. This requirement enhances transparency and accountability in real estate transactions, ensuring that buyers fully understand the financial aspects of their agreements with agents.

The goal of these changes is to promote more openness and adaptability in real estate deals. The changes have the potential to reshape how agents are compensated and how buyers engage with agents during the home purchasing process.

Do these changes benefit me as a buyer?

How the NAR Changed the Way Buyers' Agents Get PaidWe know that any changes to the buying process can become a source of stress. Understanding the nuances of home buying can be challenging, but we're here to help you make sense of it all so you can move forward in house hunting with total confidence. 

The good news for you as a buyer is that these changes are designed to offer buyers some distinct advantages. These are some of the benefits:

  • Negotiation Power: Historically, real estate commission rates have been standardized, typically around 6%, split equally between the listing agent and the buyer's agent. The new agreement encourages a more open negotiation process, allowing buyers to discuss and agree upon commissions based on the services provided and associated costs.
  • Empowerment and Informed Choices: By requiring written agreements on commissions, buyers are empowered to make informed decisions when selecting an agent to represent their interests. This transparency ensures that buyers understand the financial arrangements upfront. When you're working with us to find an agreement, we hope to earn your trust and foster a mutually beneficial relationship.
  • Control Over Costs: The flexibility in commission negotiations gives buyers greater control over their expenses when purchasing a home. You can discuss and agree upon the level of service you expect from us as your agent, aligning with your budget and specific needs. Think of this as a way to customize the service you are getting, and the relevant cost of it.

Being able to customize your service to meet your unique needs is one of the biggest advantages here. Real estate expert Greg Smith with Boulder Home Source explained why this is so valuable:

"Finding a realtor who understands and works with your unique needs is crucial because they are not just helping you find a house; they are guiding you towards a home that fits your lifestyle, preferences, and long-term goals. The new NAR agreement just allows your agent to further personalize the service you are getting."

This agreement marks a historic change in the real estate industry, and we know that change often causes some discomfort and stress. If you have concerns about how the new NAR agreement will impact your ability to buy a home, we want to talk with you. We're here to support you in reaching your goals in real estate, whether that's buying your first home, investing in income properties, or finding your forever home. 

Want to learn more about buying a home in Ellicott City? Contact us any time to get started. 

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