The August 17 deadline to implement practice changes stemming from the National Association of REALTORS proposed settlement agreement is here. How will it change the way clients work with realtors? How could it affect realtor compensation?

One important change is a new requirement that agents working with buyers enter into written agreements with those buyers before touring a home, either in person or virtually. The agreement must specifically disclose the amount or rate of compensation an agent will receive. In our area, many buyers were already signing an agreement with their agent, but now there are more rules regarding what the agreement says.

Changes to Realtor Compensation

Under the proposed agreement, the types of realtor compensation could be:

• Fixed Fee commission paid directly by the buyers
• Concessions from the seller
• A portion of the listing broker’s compensation

I would expect that we will still see the third option, a portion of the listing broker’s compensation, as the most common method of paying the buyer’s agent. This is what we are used to. The selling agent negotiates with the seller to pay a fee (typically 5 to 6%) and shares this fee with the buyer’s agent. But this is so new that we will need to wait and see if I am right.

Concessions From Sellers

I could also see more of the second option, concessions from the seller. For example, the client and agent sign an agreement setting their compensation at 2% of the sales price. The contract is negotiated with the seller, who pays 2% of the buyer’s closing costs, and that money is used to pay the buyer’s agent their commission.

In this very competitive real estate market, the buyer’s agent is essential to helping clients identify properties and put together a successful offer. There are still too many buyers and not enough houses on the market. I will be watching these developments carefully and reporting back to my readers. Please share your experiences with me.