Recently, people who want money united, and filed a lawsuit against Realtors. Their claim is summarized in that they were forced to pay price fixed & inflated commissions.
Realtors is a group of real estate agents that have formed a union like club and called it REALTORS. The union was not happy about losing 418 million and they don’t want to get sued again. To Prevent future lawsuits, the people in charge of the Realtor union have mandated that all members of the Realtor union must state more clearly what expenses the buyer and seller are paying and who pays them. They must also remind the customers that they have the right to ask for lower commissions.
for more than 100 years, sellers have been hiring a representative and offering a type of rebate to the buyer such as a buyer agent commission. This system works well. The recent lawsuit concluded that this system is going to continue but the way the paperwork is written will change. The goal is to prevent the consumer from feeling forced to pay commissions that they may not have agreed to. Two disclosure changes have occurred.
- Buyers agents must have a written agreement with buyers prior to showing them homes. This agreement states how much the Realtor is expected to be paid by the buyer or from the sellers offering to buyers agents. Previously, agents could opt to show homes to buyers without a signed buyer/ broker agreement. This new procedure inadvertently limits the freedom of the buyer to bounce from agent to agent. This new procedure makes it harder for agents to collect any commission amount other than what is on the signed buyer/broker agreement. Buyer agents can however collect bonuses provided by the seller.
- The Commissions offered by the seller must be advertised in new ways that are more transparent to the buyer to encourage negotiation and awareness. This new procedure has removed the age old commission offering from the Realtors MLS page and transferred it to brokerage websites and other forms of communication. This procedure may encourage agents to call each other and check each others websites and communicate more with the buyers about the costs of using Realtors.
In the past, almost all motivated sellers have offered a rebate to the buyer. Many buyers simply do not have the cash to pay their buyer Realtor directly. The seller rebate helps the buyer to get a higher mortgage amount. Then pay the seller and the Realtor at closing with less out of pocket money. This procedure of providing a rebate at closing will continue to endure the test of time. A smart seller will realize that its all the buyers money in the end. As long as the seller takes home the amount that they wish for everything is good. Offering to help the buyer pay the buyers agent has always worked and will continue to work. It is however clear that all costs should be clear to all parties and never feel fixed prior to a signed agreement.
Strangely enough, these rules are not state or federal rules; they are procedures imposed only upon agents and brokers that choose to be a part of the Realtor Network. The Realtor network operates on a national level and applies a code of conduct to help prevent fraud and prevent disputes. The Realtor network has a sort of monopoly. It is much more challenging for most agents to operate a business without paying the Realtor Union. Without the Realtor union, agents are blocked from using the multiple listing services in most cases. The Realtor network has exercised the power to change procedure in attempt to prevent costly 418 Million dollar lost lawsuits.
At Prime Time Real Estate, We have always made it our priority to ensure that all parties know where the money is going before agreements are finalized in writing. However, we hope that these new changes help to prevent fraud and deceit rather than increase it.
Sarasota Home Sales Team 