Buy or Sell a House Now or Wait Until After the NAR Settlement Changes in August?

Industry disruptions can happen through groundbreaking products, like the iPhone, or policy changes, such as the legalization of alcohol after Prohibition. These disruptions often benefit the public, but not always. For example, policies that encouraged car manufacturing over public transportation (trains/trams) pushed people into buying cars at the cost of our environment.

This year, the real estate market is facing a significant shift with the upcoming National Association of Realtors (NAR) settlement changes set to take effect in August 2024. These changes could transform the home-buying and home-selling experience. Here’s a simplified look at what you need to know and consider.

Real Estate Policy Changes

The NAR lawsuit, which challenges the standard real estate commission practices, is a significant disruption. The lawsuit claims that realtors and brokers have implied a non-negotiable 6% commission (lol) and that sellers shouldn’t have to pay the buyer’s agent commission. Here’s a breakdown of the upcoming changes:

NAR Settlement Changes – Begin August 17th 2024

  1. Offers of Compensation: Sellers can choose not to offer a Buyer’s Agent Compensation (BAC).
  2. Written Agreements for Showings: Required for all residential and commercial showings.
  3. Prohibition of Compensation Publication: Compensation for buyer’s agents cannot be advertised on the Multiple Listing Service (MLS).

For better context on the effects these changes will have, let’s first explore how traditional real estate sales function and compare it to the changes coming to the industry.

Traditional Real Estate Sales (1930 – August 2024)

Traditionally, selling a home involves:

  • Hiring a realtor to list and market the home.
  • Entering a listing agreement, which includes a commission that is split between the listing agent and the buyer’s agent.
  • Marketing the property on the MLS, including the buyer’s agent compensation (BAC); Agents can see how much commission is offered for each property.

This system allows buyers and agents to work together without upfront costs, since agents earn their commission from the sale.

New Era Real Estate Sales (Starting August 2024)

With the new changes:

  • Offers of Compensation: Sellers decide if and how much to compensate buyer’s agents, separate from the listing agreement.
  • Written Agreements for Showings: Required for all showings, which is a significant change for agents and buyers.
  • Prohibition of Compensation Publication: BAC will not be visible on the MLS, requiring new ways to negotiate agent fees.

Impact on Buyers and Sellers

For Buyers:

  • Potential for Upfront Costs: Expect new fees from buyer’s agents, including flat fees or percentage-based commissions. There might be additional costs for services like property searches, showings, and offer writing.
  • Written Agreements: Required for showings, potentially increasing upfront costs.

For Sellers:

  • Potential Savings: Sellers might save on commissions by not offering BAC, but listing agents might introduce new fees for additional services like open houses and showings.
  • Home Prices

What to Do?

The decision to buy or sell a home now or wait depends on several factors:

  • Personal Financial Situation: This is always #1. The best time to buy is when you can afford it.
  • Current Market Conditions: Consider interest rates and home prices.
  • Expert Advice: Consult real estate agents and financial advisors to understand how these changes impact your specific situation.

While the full impact of these changes will take time to unfold, staying informed and planning ahead will help you navigate this new era in real estate.

For our sellers, we intend to continue to advocate for a buyer’s agent commission, as it will greatly increase the chances of a successful sale.

For our buyers, things could change, but how much remains to be seen. If buyer’s agents can’t secure a form of payment from a seller, they will likely ask the buyer to cover their commission in one form or another.

Much more to come from this!

Keep an eye on updates as we approach August 2024 to make the best decision for your home-buying or selling journey.

Who is The Prestige Team?

Rancho Palos Verdes Realtor Broker Associate Karen Anderson, along with her Real Estate Team, The Prestige Team, has been selling residential real estate in the South Bay, including Rancho Palos Verdes, San Pedro, and far beyond LA County for over 27 years and is ranked in the top 1% of realtors in Rancho Palos Verdes.  We specialize in transforming homes into impeccably presented real estate listings that command top dollar in the shortest amount of time!  

Learn more about us below!

Before After

For our Buyers:

Added Benefits When Working With Us

Contract Knowledge

The Residential Purchase Agreement is 10 pages of terms and conditions that stipulate every aspect of the purchase, and we know exactly how to use them to your complete advantage!

Expert Negotiators

As experienced Full-Service Realtors, we know how to leverage you buying and bargain power. Whether competing to get your offer accepted or negotiating repairs, our goal is to get you a great deal!

Team = Always Available

The added benefit of working with The Prestige Team is that one of our Real Estate Professionals is always available to help. No missed opportunities!

On Every Listing:

Need Additional Assistance? We Specialize in that!

Decluttering & Emptying Properties

Need help with decluttering? Whether you need a few boxes and an extra set of hands, have a house full of items that need to go, we have the resources in place ready to assist with your needs!

Schedule Management

Schedule Management is crucial if you have a time frame in mind for the sale of your home. Let us use our experience to ensure every aspect of preparing your home for the market stays on schedule!

Team = Always Available

The added benefit of working with The Prestige Team is that one of our Real Estate Professionals is always available to help. No missed opportunities!

Latest Posts