Will new real estate law on August 17th dramatically lower realtor commissions?
 

On August 17th a new real estate law will go into effect which will no longer allow realtors hired by the home seller to list the commission the seller will pay to the buyers realtor. In short, the seller will negotiate the commission with their realtor and the buyer will negotiate their end of the commission with the buyer’s realtor. Seller and buyer pay their own fees. The savings could be huge.
Instead of the seller paying a 5-6% commission to be split between seller and buyer agent, the seller could negotiate a 2 1/2 - 3% commission with their realtor. On a $500,000 home the seller would pay $25,000 - $30,000 under the old law and “only” $12,500 - $15,000 under the new law. Double this for a $1,000,000 listing, etc.
I spoke with a Village Realtor concerning pre owned homes and was told they are maintaining the 5-6 % commissions.
Will this cause Villagers to choose MLS if selling their home? Will FSBO sellers now be more willing to hire a realtor? How do you think this will play out?

Is this a Florida state law, or is it an MLS rule? I have never agreed to pay any commission to a buyer's agent.

FTC ruling so is national and all realtors must abide. Google “New realtor commissions and FTC”

Sounds like it’s another bureaucratic overreach to me. But I suppose we will see how it all “shakes out” when this is implemented.

NAR Rules for settlement
 

This is the buyer information sheet from NAR. We will be able to have open houses without the form signed for touring an open house. However to answer specific questions and price negotiations we will have to have a form signed. No REALTOR will be able to show you a home without a from signed. It does not ask for financial information.


NATIONAL
ASSOCIATION OF
REALTORS®
HOMEBUYERS:
HERE'S WHAT THE NAR SETTLEMENT MEANS FOR YOU
Buying a home is one of the largest financial transactions most people will ever undertake. Agents who are REALTORS® are a trusted source of advice and stand ready to help you navigate your homebuying journey and make the choices that work best for you. NAR's recent settlement has led to several changes that benefit homebuyers, and we wanted to clearly lay them out for you.
Here is what the settlement means for homebuyers:
• You will sign a written agreement with your agent before touring a home.
• Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.
• The buyer agreement must include four components concerning compensation:
a. 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.
b. 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").
c. 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,
d. A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.
• Written agreements apply to 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.
• The seller may agree to offer compensation to your agent. This practice is permitted but the offer cannot be shared on a Multiple Listing Service (MLS) — MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale.
REALTORS are members of the National Association of REALTORS"

Thank you. I don't understand how this would affect me at all. I have sold houses with a listing broker contract, but I have always made it clear that the broker is representing me only, not the buyer or their agent. The entire commission is paid by me at closing, and all of the money goes to the listing broker. Any licensed agent who shows my house is representing me. If they have a written buyer's agent agreement, they cannot show the house. It is also a violation of Florida law to be a dual agent.

I’m not sure we are on the same page. I understand what the duty is of a sellers agent but this has nothing to do with the splitting of the commission. If a seller agrees to pay their broker a 6% commission, then that commission is split. At closing, the sellers agent will pay around half of their 6% commission to the buyers agent. Thus, the seller paid both the selling and buying agent fees. If the agent for the seller also brings a buyer then they get the entire 6%. This is known as double dipping. You mention that you paid the commission, as is customary. If a buyer has a realtor who shows and sells them a home then this is when the split occurs. May I ask what commission rate you paid? If it’s 5 to 6%, then you paid both agents. This is why the FTC got involved.

The new listing agreement that is out has more choices for the seller:

A: seller pays x% to listing agent and listing agent split with buyer's agent (what it has been)
B: seller pays x% to listing agent and seller pays x% to buyer's agent
C: seller pays x% to listing agent and 0 to buyer's agent

It didn't help me at all in Ohio. The way ot was explained it if you pay the seller realtor 3% and offer the buyer 2%, the home buyer makes up the difference. I was also told that realtors can see and sometimes won't show a house if they feel shorted on the commission. The whole thing is a scam.

It's about representation. Under Florida law, an agent cannot represent both the buyer and the seller. When I sign a listing agreement, it is clear that any licensed agent who shows my house is representing me, the seller. If an agent has a written agreement to represent the buyer, they cannot show my house because they are acting as an illegal dual agent. At closing, the entire commission is paid by me on the seller's side of the closing statement. If it turns out that an agent showing my house has a buyer's agent agreement, they are violating both the listing contract and Florida law. I am willing to pay an agent to represent me in selling a house, but, I will not agree to pay any commission to a buyer's agent. I expect agents to treat buyers and sellers fairly, but, I expect them to act in my best interest to get the best price, since they are representing me, the seller.

I agree with your post 100%. However, with respect, the new law is about how seller and buyer realtor commissions will be paid and not about representation.

It's not a law, but yes.

Thanks. Referring to Post No. 8, I have always used option C. I don't care if a buyer has an agent, but I will not pay for it.

No Way
 

I would in no way shape or form agree to a 6% sales contract now that the new law is coming into effect. You can list any home on the MLS yourself for $99. Zillow is a great platform to advertise on.

I hasn't been that way when I have signed a listing contract. I have always used option C.

correct, it hasn't been that way because now the FTC rules have changed. .

You can pay 0 to the buyers agent, your choice, the result may be that you are limiting your pool of buyers to a much smaller subset, which means your buyer pool is

Either is not using a buyer's agent, so could care less about buyer's commission
or
Is using a buyer's agent AND can pay for the buyer's commission in addition to the house sale.

You will be excluding buyers with agents who can't afford to pay the buyer's agent separately.

Of course you can do whatever you want, you just might have consequences you don't want, such as waiting much longer for a buyer who meets your qualifications. .

Other questions are,
will the buyer put into the offer letter that the seller must pay the buyer's agent or the offer is null and void?

If so, then you may have a lot of failed bids when one tries to sell.

Will you the buyer accept a higher offer with the excess over listing returned to the seller as the buyer's commission at closing?

Will the bank accept that higher price and those terms for financing by the buyer?

again, the market will be sh!t show until everyone figures out a standardized way of managing a real estate transaction, including banks and buyers. . Its a change, humans resist change or make a mess of it, one way or another

My only reason to pay a seller's commission is to pay for an experienced agent's sales, marketing, and negotiating skills. If potential buyers have their own agent, and expect me to pay them, I don't need an agent. I would rather list the house as a FSBO and offer a 3 percent finder's fee to whoever brings me a buyer.

Say I walk into an open house and I’m not signed with a buyers agent, make an offer representing myself… is the only commission due on the (accepted) offer paid by the seller based on their agreement with their listing agent?

So which are you going to choose? I get the logic, but you have to make a decision when selling the house, so which will it be?

a) paying a selling / listing agent
b) paying a buyer's agent and you will do the listing and the marketing?

since you gave an either or scenario, which are you going to choose?

Never happen..
 

Realtors need to make money. I don’t know any realtor that would help anyone for nothing. I think it’s going to be a massive disaster.. my thinking is you will see Zillow getting involved like it’s always been the goal they had. They sold leads to agents for a huge amount of money.. how do they replace that money.. hire a bunch of realtors for a fee. sign you up as client on a contract. And voila they own it all and you will pay..

I would prefer to pay a seller/listing agent to represent me only because I think they are better qualified to market a house than I am. But, if they force me to pay a buyer's agent commission, I will do a FSBO.

I agree with the selling agent.
Not sure how I will handle the buyer's agent fees, since here in MA lawyers do most of the buyer's work.. . . which is my I am reading my socials for specific news from reality is stranger than fiction. .

expected to be yes. . .

As I understand it, the buyer's and seller's agents don't get paid to do anything but to negotiate and execute a sales contract. Everything after that is the responsibility of the title company. They have lawyers on staff to make sure the title is clean and is transferred legally. When you sell a house as a FSBO, the title company will provide a FSBO package that has all of the forms needed to execute a sales contract, and they will take over from there.

Here in MA, we don't have title companies, we have lawyers and titles.
which is why I gave my MA scenario, and have spoken with lawyers about the sale.

The seller's agent lists and markets the house.
The buyer and selling lawyers execute the deal.
The buyer provides the funding checks, the lawyers handle the money to go where the agreement states. .

Which is why I am watching to see how to structure the sale with the listing agent and how to handle any MA buyer's agents. . just not sure how it will change the process quite yet, but it will change it.

Yes. Prior to the FTC ruling, a seller agreed to a percentage of the sales price of the home due their agent (brokerage) upon closing. What many people don’t realize is that the seller’s agent had a side deal with the buyer agent, if a buyer was working with a realtor. The seller doesn’t see this arrangement on the documents they sign for representation. However, the MLS has a form that only the realtors have access to which discloses what the selling agent will pay the buyer’s agent if they bring a buyer and close the deal. We, as sellers, never see this.
Example: 5% commission on $600,000 home. Seller’s agent/brokerage receives $30,000 from seller at closing. The deal the seller’s agent made with the buyers agent may be 50% (could be less) of the $30,000 commission that the SELLER paid. So, yes, the seller paid both commissions. They just don’t realize it. This ruling is designed to prevent this such that each party pays their own agent’s fees.
If the buyer doesn’t engage the services of a realtor then the seller’s agent pockets the full fee. So, instead of agreeing to 5-6% you can now offer 2 1/2 - 3% to the listing agent and let the buyer decide if they want representation.
A previous post was spot-on. A buyer may ask a seller to pay their buyer fees but the seller can decline which may decrease the pool of offers.

If you do a FSBO, then you'll have to handle both the buying and the selling agents' jobs by yourself. You'll have to do your own advertising, handle all phone calls, scheduling of appointments, showing the house, dealing/negotiating with any possible interested parties, arranging for a lawyer to write up the deal if you are successful in your negotiations, help the uninformed buyer find/locate financing, arrange for all the inspections, negotiate again with the buyer if any problems crop up, and hopefully jump through all these hoops successfully in order to arrive at a closing date.

Meanwhile, you'll need to be a salesman and negotiator to soothe the buyer's nerves if/when problems/situations come up regarding the inspections, the contract, or the financing involved. It's not rocket science, but if you haven't done this type of stuff before, you'll likely be pulling your hair out and begging for help from someone long before you get to the closing.

No help
 

No pay? Let them do it themselves. Problem solved

This new regulation is going to be a nightmare. You forgot to mention that before you can even view a home you are interested in you need to sign an agreement to pay a certain commission to the agents, I am not comfortable signing anything unless I am making an actual offer. Think about how many homes someone looks at before buying.
I see this turning bad for realtors and people go back to for sale by owner.
Buyer’s will need to agree to pay an agent for their time for showing a home even if you don’t buy one.
This is what I gathered from listening to realtors YouTube from here in TV.

This cuts in half the commission the seller pays, as the buyer’s agent no longer splits the commission with the seller’s agent 50/50. Great! That saves you a bundle when you sell. But if you then BUY a house, you now have to pay 3% to the buyer’s agent, whereas before the seller paid. So if you both buy and sell, you come out the same. Of course, if you have to pay for that additional 3% by taking out a larger mortgage, you pay off that amount by mortgage for many years.

You DO NOT need a buyers agent many realtors that are posting on here are in denial. You can go directly to the listing agent and make offer yourself. I would NEVER pay a buyers agent to walk me into a listing agent house make offer and paying them around 12 thousand depending on the price of the house.Also selling your home 2.5 percent to the agent is okay but there are other listing options which could save you substantial amount of money. Real estate agent trying to put their spin on it.The reality of the situation all agents work for themselves no sale no commission. They like that
saying I represent buyers or sellers BS .Soon buyers agents will become like travel agents dinosaurs. The Villages at some point will have to lower there commissions because why pay them 5 percent when MLS agents will start taking 2.5 percent to sell your house. Sellers should offer nothing to buyers agent let the listing agent split there 2.5 percent if they want. Example I bought a pre-owned house from Village sales agent like many people WITHOUT buyers agent and negotiated myself so why pay a MLS buyers agent would you pay somebody to go to a car dealership and help you buy a car. Everything the MLS agents have access to comps ECT can easily be found on Internet the same place they get there information from. But if you want to pay them to do it will cost the buyer or seller approximately 2.5 percent of sale price.

But you did the commission you paid was split between the selling agent and the buyers agent. In a sense they both worked for the seller because that is who was paying them.

Reason
 

What most don’t realize is the law will help real estate and bring down prices. For years real estate was on a roller coaster ride mostly as an upward trend adding to inflation.

The main reasoning was commissions added to pricing like ponzi progression. Without those huge price increases to pay salesmen (AKA Realtors) for every transaction, prices will decline. Wait and see.

Think back to the 60s and 70s when you had life insurance salesmen striking it rich. The whole system eventually folded.

Talk about the government screwing up a business. Here is the perfect example of government interference.

Good for People
 

I believe a free market is everything, but the escalating of prices because of the inclusion of flat commission fees in pricing was unsustainable. Besides, now more will soon be able to afford housing.

Wouldn’t The Villages “Sales Agents” be exempt from this new law? They are not realtors, not members of the National Association of Realtors. As such they’d set their own commission right?

In Florida, realtors are automatically assumed to be “transaction agents”, which means they can represent both sides; seller and buyer. The post that said they can’t is incorrect. I am an MLS realtor so I know of what I speak here.
Buyers will have to sign an agreement before they are ever shown a home by a realtor. The purpose of the new law is to provide transparency as to how each agent is to be paid. The vast majority of sellers’ agents will continue to offer split compensation to pay the buyers’ agent; it just can’t be posted on MLS that way. Buyers’ agents will be more likely to show a home that is offering compensation, so it’s in the sellers’ best interest to agree to the 5-6% on the initial agreement. Close to 80% of homes sold in The Villages are sold not by the listing agent but through the buyers’ agent, so it makes sense to make it attractive on the compensation to attract other agents who will show the home.
The reality is that nothing happens until the buyer brings the money for closing. It’s just a question as to whether the buyers’ agent commission is listed on the final balance sheet on the buyers’ or sellers’ side.
Of course you can choose to try to sell your home yourself. But there is quite a lot of work, knowledge and negotiation skills that realtors bring to the table. We definitely earn whatever percentage we negotiate.

the Villages Realtors (or whatever they are or call themselves) have never split commissions with buyers' agents. Never.
When you buy a home through The Villages Realty if you want representation looking out for your interests, you have always had to hire and pay that out yourself, separate from the home purchase.

But they sure sell a lot more re-sales than the MLS agents do.

We will be in the same boat with you! Have a home in TV and on the Cape- getting ready to sell one in Western MA in the next year-