AARP Hearing Center
Most older adults plan to age in place. But that’s not always possible — health conditions, budget changes and other “life happens” moments can mean you need to sell your home and/or buy a new one.
If you find yourself navigating the real estate market, you’ll want to get up to date on some major rule changes when it comes to agent commissions. Why? It could mean thousands of dollars in or out of your pocket. Here’s what you need to know.
Who do the new rules apply to?
The changes apply to brokers and agents representing clients looking to buy or sell a home advertised on a multiple listing service (MLS) database affiliated with the National Association of Realtors (NAR). These databases are strictly for the use of licensed real estate professionals as a means to share information about houses on the market — how many bedrooms, location, square footage and other details — and are not accessible to the general public for safety and privacy reasons. That said, your real estate broker will share specific listings with you related to what you’re looking for.
And what’s changed exactly?
It’s complicated, but it boils down to this:
For sellers: Blanket offers of compensation on behalf of sellers to buyers’ agents will no longer be included in listings posted on the MLS. However, they will still be allowed to appear practically anywhere else, including the agent’s own website, a display at an open house or when communicating directly with an agent representing a prospective homebuyer.
Sellers may still elect to pay for a buyer’s agent’s compensation, but without the pressure of making a public, blanket offer on the MLS. Some may opt to pocket the savings and only cover their own agent’s commission.
For buyers: Homebuyers will be impacted the most as they’ll now have to factor in the cost of hiring an agent if a seller isn’t willing to cover it.
Homebuyers who want to work with an agent will have to sign an agreement upfront that details the services that agent will provide and how much they will be paid, including whether it’s through a commission split with a seller’s agent.
Generally, an agent who represents a buyer typically receives around 2.5-3 percent commission based on the purchase price of the home. Agents then share part of their commission with their brokerage.
The new rules require that buyer agreements be completed before an agent begins working on a client’s behalf, including before the agent takes a buyer to tour a home, whether in person or virtually. However, a buyer can still go to an open house without signing a representation agreement.
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