NAR Change Date Approaches
August 17th changes the game for real estate. We continue to get updates, attend meetings and try to understand all that is still evolving. We thought we would share the latest from NAR: View in Browser Hello all, Ahead of the August 17 implementation of NAR’s practice changes, we wanted to provide a few reminders of actions that are required to obtain a release of liability and protect your organization from claims related to broker commissions: We recommend all MLSs implement practice changes by August 17. REALTOR® MLSs (those owned exclusively by one or more REALTOR® Member Boards) must implement the changes by this date to remain in compliance with NAR policy. Offers of compensation are prohibited on MLSs. Offers of compensation will continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals. Offers of compensation help make homeownership and the benefits of professional representation more accessible to buyers, including first-time homebuyers, increase homeownership opportunities for historically underserved groups, and benefit sellers by expanding the potential buyer pool. Agents working with a buyer must enter into a written agreement before touring a home. Ahead of August 17, NAR encourages all members to address form changes and prepare to educate real estate professionals and consumers about revised forms. NAR policy does not dictate terms of buyer agreements, but NAR has created resources to assist with implementation of the settlement terms—such as tips on clarity and emphasizing consumer choice—including our “Written Buyer Agreements 101” resource, available here. The practice changes are detailed here, and clarifying information is available in our FAQon facts.realtor. We also want to make you aware of several recent updates including: NAR Legal has 5 new “Settlement Facts” videos which are available here. The new videos cover: What happens to offers of compensation on the MLS after August 17 Required terms for listing agreements to comply with the settlement What is class notice, and what to expect Using a broker compensation agreement How the settlement impacts seller concessions
The NAR Settlement & Buyer's Agency
The National Associations of REALTORS (NAR) recently settled a class-action lawsuit that will have an impact on how real property is bought and sold. Ultimately, we see this as a good thing. The buyer side of the equation will increase in transparency and professionalism. Black Canyon Homes does a lot of buyer business so we wanted to share just a few points to help clarify things. More importantly, we will take all of the time necessary to talk through the changes and how you are impacted. Ask us anything. Key points: 1. All agency compensation (listing and buy-side) has always been negotiable and remains that way. 2. As of August 17, 2024, agents assisting buyers CANNOT show a listed home without an agreement in place beforehand. This is a requirement for any agent who belongs to an MLS (who isn't?). So, when your newly found agent tells you that you have to sign an agreement just to show you a property that you saw on Zillor or Realtor or wherever, they are telling you the truth. 3. Part of the agency agreement deals with buyer agency compensation. As of August 17, 2024, listing agents can no longer publish the buyer agent compensation in the MLS system. Buyer agent compensation has to be negotiated between the buyer and the buyer agent separately. Yes, the comp can still come from the seller side like before. 4. We expect that listing agents will still encourage their sellers to provide compensation to buyer's agents. This remains legal and can be published anywhere outside of the MLS system (flyers, agent websites, etc.). We think that it will be a competitive advantage in our listings to actually promote buyer compensation because homes without will be negatively impacted. Imagine offering even just a small % more than anyone else and what kind of exposure to potential buyers that brings. 5. There are several options for how a buyer's agent can be paid. Examples.... The buyer can pay their agent. The seller or listing brokerage can still pay the buyer agent (like it was commonly done in the past). Or there can even be a hybrid. What we think you will commonly see is that a buyer's agent will negotiate with their buyer to pay a certain amount, let's say 3% for representing them. The buyer will then be responsible for paying that amount. However, in the buyer agreement, there is a check box that says that the seller or listing broker may pay. So, while the agreement says the buyer is responsible, the net is that the seller pays some (whatever he/she agreed to when they listed the house, say 2.5%), and the buyer pays the rest (3% - 2.5% = .5%). 6. It would not surprise us to see the lending industry allow for buyer compensation to be rolled into the loan "one day". The net net of pre-August 17 deals involving financing commonly had that result anyway. Buyer finances 80% of the price, and seller pays all agency compensation out of his proceeds. 7. There might be confusion on how all this plays out as we transition over. Eventually, the market will be savvy to the new rules, and things will stablize. Ultimately, we do not believe that this will be as big a deal as some are making it. We certainly do not agree that this will reduce home buying costs. No one works for free. Are "they" thinking that buyer representation will just go away? Would you walk into a divorce proceding without professional representation when the other party has a trained pro? Who is going to come out on the short end of that stick? REALTORS are pros. They deal with stuff every single day, and representation insures as smooth a purchase with the most favorable terms possible. Change can be good. We believe it will be, and we are big advocates in open communications and an educated consumer. Please feel free to reach out with any questions. The team of Black Canyon Homes
VA Loans and Buyer Representation
NAR Settlement is bringing changes. We all know that some changes are coming to how real estate is bought and sold because of the NAR (National Association of REALTORS) settlement recently. We will talk about that more soon. One BIG change that is coming is that buyers’ agents commissions will not be published in MLS listings. It also means that there will be some sellers who do not cover the buyer agent commission as part of the listing agreement. So, there are a number of new things that must be worked out if a buyer wants representation (and we think they should). What you may not know is that VA loan buyers have not legally been able to pay commissions for buyer representation. It has come from the seller side. The NAR settlement has now created a really tough situation for this group because if there is no coop compensation, the buyer agent will not be paid for VA buyers. Who works for free? No one. So, VA buyers, without representation, will be in a bind. BUT! This past week, the Veteran’s Administration deputy director Michelle Corridon made an announcement at the Mortgage Banker Association’s meeting that the VA will be rolling out a temporary fix to the commission issue and will soon release a circular that “bridges the gap”. Ok. It’s a start. The government actually moved pretty quickly on this. The details are forthcoming, but there is light at the end of the tunnel. What would be really cool is if this started the process to just get the lending industry to allow for buyer commissions to be paid straight out of the loan proceeds. It is in indirect fashion anyway. You can read the entire Housingwire article here.
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