Changes to real estate marketing rules go into effect

Changes designed to enhance transparency and clarity in real estate transactions went into effect nationwide Aug. 17. The changes ensure that both buyers and sellers have a clear understanding of the terms and compensation related to real estate services. 

The revisions include the following:

Written agreements for buyers 

• Requirement: Real estate agents must now enter into written agreements with buyers before showing homes listed on Multiple Listing Services (MLS). 

This agreement must clearly detail: 

• Compensation Disclosure: The amount or rate of compensation the agent will receive or how it will be determined. It must be specific and not open-ended. 

• Objective Compensation: Compensation must be stated as a specific amount or rate (e.g., $0, a flat fee, a percentage) and not as a variable amount based on what the seller offers. 

• Compensation Cap: The agent cannot receive more than the agreed-upon amount or rate from any source. 

• Negotiability: A statement that broker fees and commissions are negotiable and not set by law. 

Changes to MLS communication 

• No Compensation Offers on MLS: Agents can no longer discuss or post compensation offers on MLS platforms. This change aims to increase transparency and reduce conflicts of interest. 

• Seller Concessions: Sellers can still offer concessions to buyers, such as covering closing costs, but these must be communicated outside of the MLS. 

Impact on buyers and sellers 

For buyers: 

• Signing Agreements: If you are collaborating with an agent who uses an MLS, you will need to sign a written agreement before viewing properties. This agreement will clarify the services provided and the compensation. 

• Negotiation: Agent compensation remains negotiable. Ensure you understand and negotiate the terms of your agreement. 

• Virtual Tours: The requirement for a written agreement applies to both in-person and live virtual home tours. 

For sellers: 

• Compensation Offers: While you cannot offer compensation details on MLS, you can still offer financial incentives to buyers outside the MLS. 

• Transparency: Ensure that any compensation-related discussions with potential buyers are clear and documented outside the MLS platform. 

Recommendations

• Ask questions: When selecting an agent, inquire about their services, compensation structure, and the details of the written agreements you will be required to sign. 

• Understand the terms: Carefully review any written agreements to ensure you understand the compensation details and the services covered. 

Mathew Joseph is the former assessor-in-charge of Queens and a real estate tax consultant. He can be reached at 929-393-5773 or at realtorplus1@yahoo.com.