With the recent NAR Settlement shaking up the real estate world, it’s important to know how buyer’s agents get paid in Colorado. This settlement has changed commission rules, so buyers need to be clear on their options when choosing an agent.
Usually, agents are paid through a commission at closing. For example, a top buyer’s agent in Colorado now includes a clause in their agreement. This clause states that a 2% commission will be deducted at closing. The agent is clear: “This isn’t a suggestion; it’s a notification.”
The National Buyers Agents Association (NBAA) has always pushed for written agreements. They say it’s crucial to review these documents carefully before starting your home search. With the NAR Settlement changing so much, understanding these agreements is more important than ever. Knowing how compensation and services work will help you navigate Colorado’s real estate market effectively.
What is the NAR Settlement?
In 2019, home sellers in Missouri sued the National Association of Realtors (NAR). They claimed that commissions were too high. The court awarded $1.8 billion to the sellers. To settle, NAR agreed to pay $418 million and also make two big changes:
- Remove buyer agent compensation from MLS listings.
- Require written agreements between buyers and agents.
Check out the video with Matt Frankel and eXp CEO Leo Pareja. They talk about how the NAR Settlement could change the real estate industry. They also explain what this means for buyers, sellers, and agents.
Also, read the National Association of Realtors® article on the settlement. NAR says the new MLS rule will change how the broker compensation offers on the MLS. However, buyers can still negotiate compensation off-MLS with real estate professionals. This change aims to make representation more affordable and fair.
Impact on Real Estate Agents
The NAR Settlement means Colorado agents may need to adjust their business practices. With more transparency and competition, agents will have to justify their commission rates better. They will also need to stand out in a crowded market.
This situation also gives agents a chance to show their worth. By offering personalized service and expert advice, agents can remain valuable to clients. They will also need to prove their value to stay competitive.
Key Points for Colorado Home Buyers and Sellers
Starting August 17, 2024, new rules will change how buyer’s agents are paid in Colorado. The NAR Settlement, finalized in March 2024, will also affect real estate transactions across the U.S. Here’s what you need to know:
- Written Agreement Requirement: Buyers must sign a written agreement if working with an agent who uses MLS. This document will also detail the services and costs.
- Mandatory Agreements for Home Tours: You need a written agreement for both in-person and also virtual home tours.
- Open House Exception: You don’t need a written agreement just for talking to an agent at an open house. It is needed only if you discuss their services in detail.
- Compensation Flexibility: Compensation, including buyer’s agent commissions, is negotiable between buyers and sellers.
- Choosing an Agent: When selecting an agent, ask about their services, fees, and any required agreements.
Get Insights from a Local Buyer’s Agent
The NAR Settlement brings major changes to Colorado’s real estate market. Buyers and agents need to adapt to these new rules. To stay informed, consider getting a free consultation from a local buyers agent. Additionally, they can provide insights on how their office is handling the new regulations.
Understanding these changes will also help you have a smooth and successful real estate experience in Colorado.
