NAR Settlement - What's changed:
On March 15, The National Association of REALTORS® (NAR) reached an agreement with plaintiffs that would, if approved by the court, end litigation of claims brought on behalf of home sellers related to broker commissions. The Settlement also includes some changes to real estate transactions, but importantly, consumers will continue to have choices regarding real estate services. These practice changes will go into effect on August 17, 2024:
•Real estate agents who use and list properties for sale on a Multiple Listing Service (MLS)—a local marketplace used by real estate professionals (both buyer brokers and listing brokers) to share information about inventory in a particular area—will be required to enter into written agreements with buyers before touring a home. Those written agreements must include:
-A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
-Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
-A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and
-A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
NAR has long encouraged its members to use written agreements with buyers because they help consumers understand exactly what services they have agreed to, the roles and responsibilities, and the amount. For this reason, several states already have laws requiring buyer agreements.
There are also changes to how and where real estate professionals may communicate with each other about offers of compensation. These offers are no longer allowed on Multiple Listing Service (MLS) platforms. Sellers can still offer compensation off an MLS. Sellers can offer buyer concessions on an MLS (for example—concessions for buyer closing costs).
Things to know as a home buyer or seller:
•If you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much.
•Written agreements are required for both in-person and live virtual home tours.
•You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.
•Agent compensation for home buyers and sellers continues to be fully negotiable.
•When finding an agent to work with, ask questions about their services, compensation and these written agreements.
The real estate transaction process:
1. Buyers-obtain a pre-qualification letter from a local mortgage lender. Get recommendations from a Buyers' agent.
2. Buyers-Work with a buyer's agent who will exclusively represent YOU to search for homes and obtain pertinent information on a property. Sellers' agents represent the seller and is unable to give buyers the same service or representation as a buyers' agent. (Again, if you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much; written agreements are required for both in-person and live virtual home tours; you do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services; agent compensation for home buyers and sellers continues to be fully negotiable; and when finding an agent to work with, ask questions about their services, compensation and these written agreements.
3. Buyers-Submit and negotiate an offer with the help of your agent. You'll need the pre-qualification letter from your lender or proof of funds if you are paying cash to submit with your offer. Sellers-your agent will help you negotiate the price and terms.
4. Offer Acceptance and due diligence. Buyers-Once the offer is accepted, your agent will help set up inspections on the property. The buyer is responsible to find out everything there is to know about the property and is responsible for the cost of inspections (types of inspections: home, septic, HVAC, pool, bulkhead, fireplace, irrigation, well, structural, mold...to name a few), appraisal, survey, elevation certificate, insurance estimates...etc. The buyers will also immediately work diligently getting all the required documents to the mortgage lender to acquire full loan approval. This is one of the longest processes of the transaction so it is best to have the required documents ready to submit to the lender as soon as possible. The contract will stipulate the due diligence timeframe in which the buyers have to conduct all inspections and decide if they want to move forward to purchasing the home. Sellers must allow access for all inspections during the due diligence process.
5. Negotiate repairs after inspections. Sellers have the option but are not required to agree to make repairs or agree to a concession for repairs. The buyers may make the requests and must decide whether to move forward or terminate the contract based on the responses from the seller. If buyers terminate contract prior to the expiration of the due diligence period, they may be entitled to a refund of their earnest money deposit. If a due diligence fee is involved, that fee is not refundable at any time, however, is credited to the buyers when the property successfully closes to the buyers, as is the due diligence fee.
6. Closing. On closing day, the buyers' agent will schedule a final walk-through of the property with their agent to make sure everything is as it was at the time of the offer. In the seasonal months, if the property is rented by vacationers, it will not be possible to conduct a walk-through on the day of closing. The walk-through will have to be conducted the day of turn-over just prior to closing. The buyers will meet with their own closing attorney to sign the closing documents. Or buyers can close remotely. All monies owed to the buyers or sellers at closing (taxes, HOA fees, deposits...etc) will be pro-rated and will show on the closing documents and handled at the closing table. Once the deed is recorded at the county courthouse (usually at the close of business), the keys to the property are handed over to the buyers as the new homeowners!
7. Celebration and enjoyment begins! Congratulations to the buyers for buying their dream home on the Outer Banks and to the sellers for the opportunity to pursue new adventures!
If you have questions concerning any aspect of buying or selling real estate on the Outer Banks, just let me know. I am here to help! wende@allaboutobx.com, 252-207-1147.