Are you in the process of buying or selling a home and wondering about who pays the real estate agent? The traditional practice of sellers covering these costs has seen a shift due to recent changes implemented by the National Association of Realtors (NAR) and Multiple Listing Service (MLS). These changes aim to promote transparency and competitive pricing in the real estate market.
Here, we will explore everything you need to know about real estate commissions and the new regulations impacting them.
What is a real estate commission?
A real estate commission is a fee paid by either the homebuyer or seller to their agent(s) for their assistance in buying or selling a property. This fee is typically a percentage of the final sale price and is settled during the closing transaction.
Who pays the real estate agent?
Traditionally, the seller has been responsible for covering both the buyer and seller’s agent fees. However, as of August 17, 2024, buyers are now required to agree to their agent’s fee in writing before viewing a property. While sellers historically paid the buyer’s agent commission, it has become more negotiable based on individual buyer agreements.
In light of these changes, sellers can consider two approaches when navigating the commission process:
- Leave the agent’s fee open-ended for buyers to submit offers that may include agent compensation and then negotiate from there.
- Proactively offer a commission or concession to buyers that can be used to cover their agent’s fee, integrating it as part of their marketing strategy.
Why would a seller pay the buyer’s agent commission?
The decision to offer a buyer agent commission is a critical aspect of a seller’s marketing strategy. It plays a role in attracting buyers and achieving the seller’s objectives. Sellers can choose to offer a concession that buyers may use at their discretion or open the door for buyers to present offers, ultimately empowering buyers in the decision-making process.
How did the NAR settlement affect agent commissions?
The NAR settlement introduced rules to enhance transparency and competition in real estate fees. These regulations require agents to provide written fee agreements to buyers before property viewings, emphasizing that commissions are negotiable. Some brokerages now mandate buyer agency agreements for exclusive representation, but Redfin does not believe in such exclusivity requirements.
Can you negotiate real estate agent commissions?
Yes, real estate agent commissions are negotiable as there are no set industry rules or laws determining specific rates. Brokers often vary their commission rates by location, making negotiation an essential aspect of the real estate transaction process.
How is Redfin different when it comes to commissions?
At Redfin, our focus is on providing consumers with the best value. With our competitive listing fees and buyer savings programs like Sign & Save, we prioritize delivering exceptional service and value to our clients.
Final thoughts
The evolving real estate commission landscape offers increased transparency and flexibility to buyers and sellers. Understanding these changes can empower you to make informed decisions while potentially saving money in your real estate transactions. If you’re navigating the real estate market, reach out to a Redfin agent to discover more about these new rules and how they can benefit you in your pursuit of a new home.
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