Part of the $418M settlement back in March by the National Association of Realtors (NAR) in a contested legal action is an overhaul to how realtors are compensated. These changes that begin on August 17th, are being dubbed the, “Change of the Century”.
Traditionally home sellers paid a 5% to 6% commission when their properties were sold. Those commissions were split between the agents representing the Buyer and the Seller.
The changes being made are intended to make the process more economical, which include…
1 – Advertising Commissions In Multiple Listing Services
Traditionally, the Buyer’s Agent Commission was advertised in the MLS Advertisement for a property. This will no longer be allowed.
These compensation details can be advertised elsewhere or communicated via telephone, just not on the MLS.
2 – Buyer’s Agents Must Discuss Compensation Upfront
Prior to touring a property, a Buyer’s Agent must enter into a written agreement with a prospective purchaser to confirm compensation details.
You can still go to an Open House without signing an agreement. These showings are handled by the Seller’s Agent. But if you’re going to look at buying a property with an agent in tow, you’ll need to sign an agreement first.
One thing is certain. When purchasing a property, a seller no longer needs to pay a commission to the Buyer’s Agent. You can represent yourself when purchasing a property and come to an agreement on a price with the seller. At that point, you’d simply have your closing attorney handle the rest of the transaction.
Many are saying that these changes will reduce the cost of selling a property by 25% to 50%.
Some are saying that this is the end of the Real Estate Agency System as we know it and that the reduced commissions will chase many seasoned agents out of the business. Others are saying that it’s an opportunity to rethink and reboot the agency system and that the older 5% to 6% commission artificially inflated the cost of property.
Much of this will come down to how experienced you are at handling real estate transactions.
If this isn’t your first rodeo and you know what you’re doing, you might be able to save some money on your next purchase. But if you’re inexperienced, you might want to hire an agent to make sure you don’t screw up a deal.
Time will tell whether this is a good change or a bad one. I’ll continue to write about this as the story unfolds.
Let me leave you with this…
As the DNC brings its convention to Chicago next week, our hotel rooms will be filled to overflowing along with restaurants and other attractions. This will be a fantastic way to showcase our beautiful city and increase revenues from tourism.
The problem is that with the security necessary to protect all the VIP’s, many will refuse to go downtown. There are two security perimeters and the planned protest route to consider.
The perimeters around McCormick Place and the United Center, which are the two main convention sites, extend in an irregular fashion anywhere from two to three blocks around the sites in any direction. These areas will be secured by the Secret Service and 16 other governmental security forces at the Federal, State, County, and Municipal Level.
Anyone coming even near this perimeter will go through a security protocol. The planned Protest Route begins in Union Park, goes up Jackson Blvd and down Washington, ending where it began.
Most companies anywhere near any of these sites are allowing their workers to work remotely next week. Personally, I’m going to make sure to stay as far away from downtown as possible.
We can only hope that all of this goes off without a hitch. No one wants to see the west side on fire again…
We’re all going to get through this. Let’s get through it together.
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Sincerely yours,
Chris Amundson
President
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