The outlook of New real estate law in America is gradually changing, especially considering recent legal fluctuations regarding the way real estate is sold and exchanged.
Up until very recently, it had been the conventional expectation that the seller of a house or property would pay the commission of not only their own real estate agents but also the real estate agents on the buyer’s side.
It usually meant a commission of 5-6%, transparent in the various multiple listing services, or MLS, and known to all parties. But a class-action lawsuit filed earlier this year against the National Realtors Association NAR accused the association of conspiring to artificially inflate the commissions earned by agents, driving up the cost of homes.
This prompted new regulations that changed commission handling, and the industry feels the resulting impact.
What Are The New Real Estate Law?
Starting in August, the new regulations prevent the advertising of buyer’s agent fees in MLS listings. Furthermore, buyers are now required to sign a buyer agency agreement with their real estate agent before being shown properties. This movement aims to bring equity to the market and will prevent brokers from only showing homes with higher fee structures.
While these regulations are designed to increase transparency, they simultaneously add complexity for buyers and sellers alike.
Buyer Implications of New Real Estate Law
Buyers are apprehensive when they are required to sign a buyer agency agreement just to view homes. Most buyers are not familiar with the legal terminology, therefore are very cautious about signing their name to any document.
Real estate agents are having to spend more and more time consulting with prospective clients about what their contract entails, but also what all the possible out-of-pocket expenses are that may arise during the purchasing process.
Eliminating public commission disclosures has also created a disincentive for purchasers to be fully aware of how much they may have to pay their buyer’s agent. Without this information, it is difficult and awkward for a buyer to budget, and raises questions regarding if properties that offer no compensation to the buyer’s agent should be valued lower than similar properties that has offered compensation.
Sellers’ Concerns of New Real Estate Law
For sellers, this means a double-edged sword of new possibilities and difficulties. Now, sellers have to make a decision to pay a buyer’s broker fee or not and how much to pay.
The new rule therefore brings variability in the way of selling: one seller may want to compensate, while another may not. These inconsistencies could give buyers greatly varying experiences and beg the question of what prices to expect for homes.
This may give properties a competitive edge over others that don’t offer to pay the buyer’s broker fee. On the other hand, sellers who choose not to contribute run the risk of discouraging some buyers who do not want to bear extra costs.
It also means real estate agents will have to take on new roles of informing sellers that, even though they have not offered to pay, an offer may still come in requesting compensation from the seller for the buyer’s agent.
Navigating The Changes of New Real Estate Law
As the real estate market adjusts to these new laws, transparency and communication are more important now than ever before. Agents more often need to have financial discussions with their clients much sooner in the process to help set expectations for a world where these additional costs formerly were more straightforward.
This approach means agents being more proactive earlier on, with many more phone calls to agents of other companies to make sure any buyer compensation being offered by the sellers is spelled out.
Where the process of buying a home is emotionally critical, it has just become more complex and burdensome for buyers. The need actually to sign agreements and understand new financial implications can be overwhelming to some, especially first-time homebuyers.
Agents should thus be prepared to take care of such changes for the clients by encouraging open communication in which all parties understand the transaction.
Bottom Line
New real estate law within the United States will continue to dramatically reshape home buying and selling in many ways. While the intent of such regulations is to make the process fair and transparent, they also raise new challenges that must be met by both buyers and sellers. As the market continues to settle, efficient communication and education are the prime ways to ensure seamless transactions.
Real estate professionals play an important role in guiding their clients through these evolving circumstances and enabling them to make intelligent choices in a far-from-easy environment.
In this regard, buyers and sellers have to be fully conscious of the consequences of these new laws if they are to successfully conduct their business in real estate. Evolving regulations are expected to bring more fairness to the marketplace but will demand adaptability and comprehension from all sides.
