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New rules have been implemented regarding the buying and selling of homes, after a settlement from a class action lawsuit took effect.
In March, the National Association of Realtors agreed to a $418 million settlement in an antitrust lawsuit in which a federal jury found that the organization and several major real estate brokerages conspired to artificially inflate agents' commissions on real estate purchases and sales.
In a statement issued at the time of the ruling, NAR denied any wrongdoing.
The settlement took effect on August 17.
Prior to settlement, NAR's Multiple Listing Service, or MLS, used nationally across regions in the United States, streamlined compensation rates for both buyer and seller agents. At the time of listing the property, the home seller negotiated with the listing agent about the compensation the buyer's agent would receive, which appeared in the MLS. However, if the seller was not aware of his ability to negotiate, he was usually limited to paying the listed brokerage fee.
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Now, as a result of the settlement, commission rates have been officially removed from the MLS and home sellers are no longer obligated to offer a commission to both buyer and seller agents.
“Now, buyers choose how much a buyer's agent makes, and sellers choose how much seller's agents make,” Glenn Kellman, CEO of online real estate brokerage Redfin, told CNBC. “It's a new competitive ball game.”
Any confusion around new practices among agents and consumers will likely be temporary, said Kerry Melcher, head of real estate at Opendoor.
“Real estate agents are good at moving the market,” she said. “That's their job. So, I don't think this will slow down the market.”
Here's what you should know.
What happens with buyer and listing agents
Prospective homebuyers may face inconsistencies in the market as real estate agents get used to new rules.
Before Aug. 17, if you called five buyer agents with the same home-buying inquiry, “four times out of five,” you would get the same answer, said real estate attorney Claudia Cobreiro, founder of Cobreiro Law in Coral Gables. , Florida.
“Now, maybe two out of five times, you'll get the same answer,” Cupero said.
That's because real estate agents receive different instructions from their brokerage on how to implement NAR settlement changes, which translates into confusion among consumers, she said.
Meanwhile, on the listing side, real estate agents are educating home sellers about the benefits of offering a commission to a buyer's agent even if it's not a set amount or percentage, Cuperro explained.
For example, offering a commission can create more competition for agents wanting to list their properties, increasing the sale price, she said.
“Explaining the benefits of continuing to offer commission despite the fact that commission is not mandatory is part of the job I now see listing agents doing,” Cupero said.
What to know about buyer-broker agreements
A buyer-broker agreement is a contract between a real estate agent and a home buyer that sets out the terms of their business relationship, and its goal is to identify a home for the buyer to purchase, Cupero said.
If a client purchases a property that meets the criteria in the agreement within the specified time frame, the agent is entitled to a commission for that purchase, Cupero said.
“The purpose of this form is to let buyers know that they are responsible for their commission on the part of the buyer,” she said.
If the seller does not offer a commission, the buyer will be responsible for any commission included in the buyer's broker agreement, Cupero said.
Buyers should feel comfortable with what buyer-broker agreement forms look like and be prepared to ask questions about the language and terms, Melcher said.
“Forms are designed for buyers to read and for buyers to understand,” she said.
— CNBC Associate Producer Ryan Baker contributed to this story.
