There are upcoming changes in the real estate industry that will affect both buyers and sellers. Here is a summary of these changes: 

Historically, buyer’s brokers have been compensated through the listing agreement between the listing agent and the seller. This compensation was detailed in the MLS (Multiple Listing Service), which acted as a commitment to pay the buyer’s broker. However, this process is changing.

Starting August 17, 2024, the offer of compensation to the buyer’s agent can no longer be listed in the MLS. Instead, buyer’s brokers will need to have a contract with their clients, including details about compensation, before showing any homes. 

This change means there will be more transparency about how the buyer’s agent is paid. Although buyers may still request that the seller pays their broker, and we anticipate that sellers will continue to agree to this in most cases, there will be situations where buyers might need to pay some or all of their agent’s commission out of pocket.

Whether this change is positive for the real estate industry depends on perspective. Here are some potential benefits and drawbacks:

Potential Benefits:

1. Transparency: Buyers will have a clearer understanding of how their agents are compensated, fostering trust and openness in the transaction process.

2. Buyer-Broker Relationship: Establishing a compensation agreement upfront can strengthen the relationship between buyers and their brokers, ensuring that both parties have aligned expectations.

3. Professionalism: Requiring contracts might raise the overall professionalism and accountability of buyer’s agents.

Potential Drawbacks:

1. Additional Costs for Buyers: In scenarios where sellers do not agree to pay the buyer’s broker, buyers may need to cover these costs themselves, which could be a financial burden.

2. Market Disruption: The transition might create temporary confusion or adjustment challenges for both consumers and industry professionals.

3. Access to Services: Buyers with limited financial resources might find it more difficult to secure a buyer’s broker, potentially impacting their ability to navigate the real estate market effectively.

Overall, while the change promotes transparency and professionalism, it also introduces new complexities and potential costs that buyers need to consider. 

There will be an adjustment period and we expect things to modify/adapt as we work through the new landscape. We want you to know that we have your back through this transition. Whether you’re a buyer or a seller, please reach out to us today to discuss how this affects you.

TARYN MARTIN | Realtor® DRE 01995581

805.636.6442

Taryn.martin@sothebys.realty