{"id":3506,"date":"2024-08-26T14:12:09","date_gmt":"2024-08-26T19:12:09","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=3506"},"modified":"2025-02-10T13:41:17","modified_gmt":"2025-02-10T18:41:17","slug":"new-rules-on-agent-commissions-post-nars-disclosure-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/new-rules-on-agent-commissions-post-nars-disclosure-what-you-need-to-know\/","title":{"rendered":"Agent commissions post-NAR\u2019s disclosure: what you need to know"},"content":{"rendered":"\n

Starting August 17, 2024, the real estate commission landscape is changing big time. The NAR (National Association of Realtors<\/a>) settlement has shaken up how agent commissions work. Here\u2019s what you need to know to navigate these new waters.
<\/p>\n\n\n\n

\n
See today’s rates<\/a><\/div>\n<\/div>\n\n\n\n

<\/p>\n\n\n\n

Big change #1: who pays for agent commissions now?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Before August 17, the seller covered the commission costs for both their agent and the buyer\u2019s agent, usually totaling 5-6% of the home\u2019s sale price. For a $450,000 home, that meant a commission of $22,500 to $27,000.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Under the new rules, sellers will only pay their own agent\u2019s commission. The buyer will need to negotiate with the seller to pay, or pay their agent\u2019s commission separately. This means the seller\u2019s cost is potentially reduced, but buyers might face higher upfront costs.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Big change #2: written agreements for buyers<\/h3>\n\n\n\n

<\/p>\n\n\n\n

From now on, buyers must sign a written agreement with their agent before seeing any homes. This agreement will outline exactly how much the agent will be paid and make it clear that all fees are negotiable.<\/p>\n\n\n\n

<\/p>\n\n\n\n

The agreement can specify compensation as a percentage of the sale price, a flat fee, or a fixed dollar amount. It used to be that Buyer Agents would split the commission on a home sale (e.g., 2.5% or 3% of the sale price), so the cost for the buyer could be pretty significant\u2014in some cases, as much as the down payment<\/a> itself.<\/p>\n\n\n\n

<\/p>\n\n\n\n

The key here is clarity\u2014everything about how the agent is paid needs to be explicitly stated, leaving no room for confusion.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Big change #3: commissions not automatically listed on MLS<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Commissions for buyer\u2019s agents will no longer be listed on Multiple Listing Services (MLS). Instead, these commissions will need to be negotiated directly between the buyer and their agent. Buyer\u2019s agents will have to contact the seller\u2019s agent to find out if any additional compensation is being offered.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Previously, sellers were required to disclose the commission they\u2019d pay to buyer\u2019s agents on the MLS. This led to concerns about \u201csteering,\u201d where agents might push buyers toward homes with higher commissions. The new rules aim to prevent this by making commission negotiations more transparent.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Impact on first-time homebuyers<\/h3>\n\n\n\n

<\/p>\n\n\n\n

The new commission structure might make the home buying process tougher for first-time buyers. With the seller no longer covering the buyer\u2019s agent commission, buyers might have to pay this cost out of pocket. For a $450,000 home, this could mean an extra $4,500 to $13,500 in costs\u2014on top of down payments and closing costs.<\/a><\/p>\n\n\n\n

<\/p>\n\n\n\n

Without an agent, first-time buyers might struggle with overpaying, negotiating, and accessing the best inventory. It\u2019s possible some buyers may choose to go without an agent to avoid these fees, but this could lead to missed opportunities and higher costs.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Budgeting for agent commissions<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Buyers may need to adjust their budgets to include their agent\u2019s commission. Traditionally around 3% should be saved, although this rate might decrease from 3-1% under the new rules.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Buyer\u2019s market vs. seller\u2019s market: how commission negotiations vary<\/h3>\n\n\n\n

<\/p>\n\n\n\n

In a buyer\u2019s market, where there are more homes than buyers, you might have more leverage to negotiate with sellers to cover the buyer\u2019s agent commission. Conversely, in a seller\u2019s market with high demand and fewer homes, sellers may not need to offer such concessions, leaving buyers to cover the commission.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Negotiating written agreements<\/h3>\n\n\n\n

<\/p>\n\n\n\n

The written agreements between buyers and agents are fully negotiable. If you\u2019re unsure about committing long-term, you can negotiate a shorter contract, even one that lasts just a day or two, to see a few homes before making a longer commitment.<\/p>\n\n\n\n

<\/p>\n\n\n\n

So, what should you expect?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

The honest answer is: right now, we don\u2019t know. This is the biggest change to the way houses are bought and solid in the U.S. in the last 50 or so years, and the real economic implications of this change aren\u2019t clear just yet. It means a lot of buyer\u2019s agents will make a lot less money than they did before and many will likely have to change jobs or focus their time elsewhere. Buyer agents used to be able to provide a lot of help and support to first time home buyers\u2014and they might not be able to afford this kind of support in the future (they\u2019ll need to take on 2 or 3x as many clients). There\u2019ll be more incentive to push people to buy faster, see fewer homes, and negotiate less, and this will have a huge impact on overall affordability.<\/p>\n\n\n\n

<\/p>\n\n\n\n

At the same time: people struggle enough already just to be able to cover the down payment and closing costs on a home. Where a month ago you could buy a $250,000 home with $15,000 saved up, now you\u2019d need to have $22,500 for the same house. We\u2019re pretty upset about this decision, to be honest\u2014here\u2019s what our CEO said<\/a> about it to MarketWatch. <\/p>\n\n\n\n

<\/p>\n\n\n\n

So, while we all wait to see what happens in the coming years, try to stay informed, be proactive, and adjust your home buying strategy to fit these new rules. While the shift might seem overwhelming, staying ahead of the curve can turn these challenges into opportunities. <\/p>\n\n\n

Claire Gallaudet<\/a><\/p>

Claire is a Mortgage Analyst at Tomo, where she explores the data and trends shaping the housing market. She is especially interested in how economic forces impact homebuyers. A Seattle native, she now lives in Austin, where she balances analysis and communications with teaching yoga and walks around the lake with her dog.<\/p><\/div><\/div>\n\n\n

If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Starting August 17, 2024, the real estate commission landscape is changing big time. The NAR (National Association of Realtors) settlement has shaken up how agent commissions work. Here\u2019s what you need to know to navigate these new waters. Big change #1: who pays for agent commissions now? Before August 17, the seller covered the commission […]<\/p>\n","protected":false},"author":31,"featured_media":3760,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[58],"tags":[],"class_list":["post-3506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2024\/08\/new-rules-on-agent-commission-tomo-jpg.webp","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=3506"}],"version-history":[{"count":4,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3506\/revisions"}],"predecessor-version":[{"id":3938,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3506\/revisions\/3938"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/3760"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=3506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=3506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=3506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}