New real estate rules for homebuyers and sellers across the state went into effect Saturday, stemming from a settlement the National Association of Realtors announced a few months ago.
The new rules would change the way commissions work.
At the close of escrow, a seller uses a percentage of their proceeds to pay upwards of 6% commission, of which half goes toward their own agent’s brokerage and the other going to the buyer’s. Agents then get a share of the commissions paid to the brokerage.
However, the spring ruling from a federal judge stated that the NAR had conspired to artificially inflate commissions. The court said the NAR required seller’s agents to offer compensation to a buyer’s broker to specifically list homes on NAR-affiliated listing services.
Under the change, sellers now get to decide whether or not to pay the buyer's broker anything, and if they choose to do so, decide how much. Additionally, sellers’ agents are no longer allowed to advertise commission to buyer's agents on multiple listing services.
The change will also require that agreements spell out exactly what commission the buyer will pay their agent.
“The buyer and their agent are going to have to have a formalized agreement like the seller and the seller's agent,” said Patrice Horvath, founder of Illuminate Properties.
Horvath said she doesn't expect the change to impact the Bay Area market, where the inventory is low and demand is high.
“I don’t see it affecting pricing or the number of offers,” she said. “I don’t see it impacting that part of the market. I just see confusion.”
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Real estate agents will now have to grapple with an additional 30 forms.
