Real estate rule changes give buyers and sellers options; local agents, brokers react

On Aug. 17, two new rules instituted by the National Association of Realtors (NAR) went into effect, changing the way home buyers and sellers engage with Realtors. The first is that real estate seller agents and brokers are prohibited from entering compensation in the Multiple Listing Service (MLS). The second is that agents and brokers must enter into a contract with a buyer before showing any properties.

In 2022, a class action lawsuit was brought against NAR in Missouri that claimed the organization “required home sellers to make a blanket offer of compensation to any potential buyer’s broker as a condition of listing their home,” according to court documents.

NAR denied any wrongdoing but agreed to a settlement in March of 2024 that changed the nature of real estate transactions.

No compensation on MLS

Traditionally, when a person wanted to sell their home, they would include a commission in the listing that would cover the fees of both seller and buyer agents. Typically, that fee would be somewhere between 5 and 6%, as negotiated by the seller and their agent, and would be split between the two professional agencies.

Sellers were never required to cover buyer agent fees. This practice was considered tradition, as explained by Devens residents and local William Raveis real estate agents Tammy and Dave Haschig: “If you’re a buyer, it’s hard to come up with the deposit money, the money to pay the attorneys, the money for all the closing costs, and then moving costs,” said Tammy. “It made sense for the seller listing agent to offer to pay that compensation for the buyer’s agent.”

If sellers were never required to compensate buyers’ agents, how did the practice become litigious? “Somehow the issue got raised, and that’s how it blew up into [a class action suit],” said Dave. “There is nothing wrong with wanting transparency, honesty, and clarity, because it is a confusing process, but I think the lawsuit was unnecessary.”

Unnecessary, because most agents and brokers were already educating their clients on the benefits of including compensation in the listing. “When the seller offers to pay the buyer’s agent compensation,” said Harvard resident and Compass agent Shannon Boeckelman, “it allows the buyer to roll that compensation into their mortgage. That is a huge benefit because now they don’t have to bring that cash to the table, but they can finance it over a 30-year period.”

The long-standing tradition of sellers offering buyers’ agents compensation affected home values and appraisals, as explained by owner of Harvard’s Hazel & Company Real Estate, Suzanne Dutkewych. She said that sellers list their homes taking the commission into account. “They might value the home at a million dollars,” said Dutkewych. “But if it’s a 4% commission, they’re going to list at $1,040,000 in order to pay the agents. The buyer is paying that extra $40,000 because we’ve increased the price of that property.”

Many buyers, including first-timers, are choosing to view only properties that are offering buyer’s agent compensation. Since sellers can no longer list this information in MLS, buyer’s agents must contact each listing agent directly to find out if the compensation is included.

“I was lucky to have a listing that went on market two weeks prior to the mandated change,” said Ann Cohen, former Harvard resident and agent for Barrett Sotheby’s Realty International. “My seller clients wanted to try offering no compensation. We didn’t receive any offers that first week, so we tried changing the listing to offer buyer agents a competitive commission. [We] received an offer immediately, and the buyer agent was paid in the traditional way. My interpretation of this de facto experiment was that even at the million dollar level, buyers were not putting in offers on properties where the buyer agent was not going to be compensated.”

Buyer’s agent contracts

On the other side of the transaction are buyer’s agent contracts. Up until last month, anyone could reach out to a real estate agent or broker and ask to see a property listing. The two would meet up, see the property, make each other’s acquaintance, and decide if they would like to continue working together.

Now, to show a home, an agent and buyer must enter into a contract. That contract will list the services the buyer can expect to receive. “That’s something that I’ve always done,” said Harvard resident and Harborside Realty broker Steve Nigzus. “It’s a way of having a discussion with somebody, to talk to them about your services, and how you will be paid.”

Amy Balewicz, Harvard resident and team lead for Amy Balewicz Homes, a division of KW, pointed out that buyers can find property easily online. MLS listings get pushed through popular sites like Zillow and Redfin, which offer a plethora of digital resources. She believes her value as an agent lies in her expertise and does not take issue with spelling that out in a contract. “We know the market,” said Balewicz. “We live and breathe these areas. We work hard to find properties, especially with inventory being so low and [the market] being competitive. We found homes for our buyers numerous times that weren’t ever publicly listed.”

Other real estate professionals think the new rule actually has a negative impact on buyers. “From a consumer protection standpoint,” said Tammy Haschig, speaking about herself and business partner and husband Dave, “You just met me, and I’m asking you to sign a contract with me that will make me your sole representative on this search. To us, that seems backwards. We were willing to give people the opportunity to get to know us before signing a contract.”

The long-term impact

The rule changes rolled out last month are still too fresh to determine their overall impact on the market. Mortgage lending rules, appraisal values, and marketing techniques need to be tweaked, and that takes time. It is unknown if these rule changes will create a barrier to entry into the profession of real estate.

“I think that buyer agents, especially new or inexperienced, will struggle more with this,” said Balewicz. “It’s about being confident about what you are worth and being able to communicate why it’s important to work with an agent and pay the fee.”

“There’s so much, legally, financially, and emotionally involved in the transaction of a home purchase,” said Tammy Haschig. “Buyers need to make sure they have representation to look out for their best interests.”

What are those interests? See “Buyer’s agent menu” for a list of services buyers should consider before signing a contract with an agent.