Earlier this year, I wrote a blog about the NAR settlement but I thought I'd revisit the process since some parts of the policies did get revised prior to implementation. The launch date for the big change was August 17th so your agent will be sharing the new process with you. Changes are in effect for both the buyer and the seller.
Here are some highlights to help explain the new process:
Buyer Representation:
All Realtors® and their buyers in California will now be required to sign a Broker Buyer Agreement before visiting any properties. It will establish an understanding of relationship, duties, and compensation.
Before viewing homes and hopefully at the beginning of a new relationship, the agent and buyer will establish what the buyer's agent fee shall be. A Buyer Representation and Broker Compensation Agreement will be signed by both buyer and seller. The agent will need to be paid for their services but the buyer has the opportunity to ask the seller to pay their buyer's agent compensation. This request occurs when their offer is submitted to the seller. The seller may accept, counter, or reject their request. It's all about the negotiation process.
Listing Agreement:
Changes have been made to the listing agreement. In the past both the listing agent and buyer's agent commission was contained in the agreement but now, only the listing agent's compensation will be negotiated and noted on the contract.
In the past, buyer's agent commission was established during the listing process and published on MLS. Now, commission has been removed from MLS and may not be determined until an offer is submitted. The buyer will make their request on the Residential Purchase Agreement. An attractive offer price may incent the seller to pay the buyer's agent compensation. A low offer may generate a counter or a rejection.
It will be the job of the listing agent to explain the benefit of paying the buyer's agent commission. Since a seller will want to maximize their buyer pool, agreeing to pay for the buyer's agent compensation creates an added incentive to a buyer and may bring more attractive offers. As a note, a buyer's agent is obligated to show all properties to their clients regardless of compensation offered but the buyer may decide not to view the property if they know the seller is not willing to pay for compensation.
Open House:
It is recommended that each visitor sign in before they tour the home. The Open House Advisory Disclosure establishes an understanding of relationship. It clarifies that the agent hosting the open house is representing the seller's interest only. If a visitor does not wish to sign, they can still tour the house. If a visitor wants additional representation, they will sign a Buyer Broker Agreement.
As mentioned, this is just a quick overview of some of the main changes. It's been a month since the new rules were implemented so we are still getting used to our new processes. In a few months, this will all seem like hold hat and on we shall go!
