House buying, selling has changes

Although the rules have changed, the actual sale is not expected to drastically be different according to two Creston realtors.

New regulations for the housing market that started earlier this month may have to change their strategy or routines.

It was common when a home was sold, a commission of 6%, for example, was paid by the seller and divided between the agents for the buyer and the seller. That formula kept commissions higher according to a lawsuit and decision that changed the rules. It also implied a seller had to pay the agent representing the other side of the buy, a practice some thought was questionable.

A federal case in Missouri that challenged that commission formula led to a jury deciding in October 2023 the National Association of Realtors and large brokerage firms conspired to keep costs artificially high. The jury awarded $1.8 billion in damages, which could rise to more than $5 billion under antitrust rules.

Under the new regulations, a seller will decide whether, and how much, to pay the buyer’s representative. That information is no longer allowed in the multiple listing service which is real estate information shared among realtors.

According to a statement, “National Association of Realtors has agreed to enact a new rule that would require MLS (Multiple Listing Service) participants working with buyers to enter into written agreements with their buyers. NAR continues, as it has done for years, to encourage its members to use buyer brokerage agreements that help consumers understand exactly what services and value will be provided, and for how much.”

Creston Realty’s Dino Groumoutis doesn’t see a drastic change with his business.

“It’s going to work the same, the only difference is because of the lawsuit they have come down and said we require everyone, before even showing buyers houses, we have to sign an agreement. ‘You work for me for X amount and be looking in this area or for a specific group of houses. You are required to pay up to whatever percentage.’ Some use a flat fee, most don’t,” he said.

Groumoutis said 6% is common in Creston.

“We are still going to cooperate with each other,” he said about working with other real estate offices.

He said he has watched video presentations about the rule changes and learned some of the information that has been on purchase agreement forms are no longer listed.

“Now, they want you to call the broker and talk about what you are offering. It’s more paperwork, but we have always used buyer agreements. We have to inform buyers and what they are responsible paying.”

The National Association of Realtors has more than 1.5 million member agents – about 85% of the real estate agents in the United States. Through its representatives, the association said more conversations among buyers, sellers and realtors will make all more informed.

There are still some uncertainties with those in real estate.

What happens if a buyer has the money to pay the broker up to a certain amount, but desires a home that would cost more than the commission would work out to? Or what happens if it turns out the seller is also willing to compensate a buyer’s realtor?

Retta Ripperger of R Realty in Creston said she doesn’t think what motivated the lawsuit ever happened in or around Creston.

“We didn’t do anything wrong. We did have a buyer’s agency paper we do use sometimes. Some use it more than others,” she said.

Ripperger said the new regulation creates additional forms.

“There is another, new buyer form with more information and pages than the old one. It spells out things more specifically,” she said.

As she understands, the realtor, before showing a house, is supposed to call the agency that has it listed and ask if they are going to share the commission.

“We are supposed to get documents they will share. I have not seen one, yet,” she said.

Ripperger said she expects the new regulations to be emphasized when working a real estate office that is not from the area.

Buyers will be required to sign an agreement with their own broker before starting to view homes. The buyer and the agent must agree, and put in writing, how much the agent can expect to receive from the buyer.

There’s some space for interpreation on what that means. A description of the rules from the National Association of Realtors states it must be “objective (e.g., $0, X flat fee, X percent, X hourly rate) – and not vague. The agreement cannot be ‘buyer broker compensation shall be whatever the amount the seller is offering to the buyer.’