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The National Association of Realtors’ antitrust settlement has led to several changes that will take place this month. The new rules mainly center on broker commissions – the amount of compensation for agents working with buyers and sellers.
While the amount of compensation to agents has always been negotiable, traditionally the seller paid a commission to their listing agent who then shared a percentage with the agent whose buyer purchased the home. Effective Sat., Aug. 17, buyers will have to sign an agreement with an agent before touring a home whether in-person or virtually, and they will now have to pay compensation to their agent. Buyers do not need a written agreement if they are just speaking to an agent at an open house or asking them about their services.
The agreement between a buyer and their agent will include the negotiated amount of compensation that the buyer has agreed to pay their agent for the list of services their agent promises to provide. Their agent cannot receive compensation from any source that is over the amount mentioned in their agreement with their buyer.
Sellers can still negotiate the amount that they are willing to pay their agent for their services in marketing their home. The seller’s agent must disclose to the seller any payment they will make to another buyer representative. The seller’s agent also can no longer mention any offer of commission on a Multiple Listing Service. MLSs are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property.
“At a time when home prices and mortgage interest rates are higher, these new rules place an additional financial burden on homebuyers, particularly first-time homebuyers who are already struggling to come up with a down payment to purchase a home. Agent commissions have always been negotiable. Seller concessions, like paying a buyer’s closing costs, are still allowed. Sellers can also offer to pay the buyer agent’s fees,” said Eileen Giorgi, president of the Silicon Valley Association of Realtors.
Giorgi said the buyer-broker agreement has been available and used for years, but it will now be required under the settlement terms.
“The agreement will likely to be required by California state law in 2025. These rules aim to add a higher level of transparency for all parties involved – buyers, sellers and their respective agents,” she said.
Giorgi expects a period of adjustment as the new rules take effect.
“Real estate has undergone many changes through the years in laws, rules of procedure, including documents used in a transaction. Real estate practitioners and their clients have adapted to these changes, and the market has continued to thrive,” she said.
Giorgi emphasized what hasn’t changed is that buyers and sellers have choices.
“If your agent is a Realtor, they must abide by the Realtor Code of Ethics and have clear and transparent discussions with you about compensation. My advice to both sellers and buyers is to choose a Realtor you can trust and with whom you feel comfortable having an open discussion about all your concerns, including compensation.”
Buyers and sellers should be aware that while the new rules take effect Aug. 17 nationwide, some MLSs, including MLSListings, which serves the counties of Monterey, San Benito, San Mateo, Santa Clara and Santa Cruz, have already implemented these changes. Consumers can find additional information on what these changes mean for their homebuying and selling experiences in NAR’s buyers and sellers guides.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
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