MESA, Ariz. — Saturday will mark big changes in the real estate industry for how homes are bought and sold in Arizona and across the nation. The modifications stem from a multi-million dollar settlement with the National Association of Realtors.
While the new realtor compensation modifications are going to affect both the buyer and seller, the buyer is expected to be more affected, said Arizona realtor Katie Evans. Evans said before the upcoming commission changes, the seller's agent would negotiate what they were going to pay the listing agent and what they’d offer the buyer's agent to represent them during the real estate sale.
But starting Saturday, Aug. 17, Evans said before a buyer's agent can take a buyer to look at a home on the market, there has to be a signed compensation agreement. And that document states how much the buyer's agent will get paid. Negotiation is the name of the game.
"Is it going be the buyer that is going to pay us directly," Evans said. "Are we going to ask the seller to do seller concessions that the buyer then can use to compensate the agent? Or is it going to be a mixture of the two? Can this particular buyer afford to pay directly or do we have to find a house for them where the seller is willing to do those seller concessions or that the seller's agent has still negotiated some sort of idea of what the seller is willing to pay us."
Evans said if the buyer cannot afford to pay their agent directly, they can look for a house where the seller is willing to do seller concessions or where the seller's agent has negotiated an idea of what the seller is willing to pay.
Under these new changes, Evans said she expects to see more home buyers going straight to the listing agent to see if they will do dual agency, which means they will represent both the buyer and seller. Evans added she expects to see some buyers entering the process unrepresented. However, she recommended finding a knowledgeable and experienced agent to partner with because of the contracts, timelines and financial ramifications of a home sale.
Tips for buyers included interviewing real estate agents before signing and finding an agent who is knowledgeable in contracts. Then ask them how long they’ve been in the business, how many homes they’ve sold, if they’ve done dual agency before, and how they get offers accepted over another agent’s in a competitive situation.
“One of the biggest gripes that people have about real estate agents is communication, Evans said. "What is your communication cadence? What is your promise? Am I stuck in this agreement? Are you going to enforce this agreement? If I don’t end up liking you, can I get out of this agreement? Because these are all legal contracts we will be signing with buyers now.”
All of the questions matter more now that the buyer is taking the lead in paying or negotiating how to pay their agent in the home-buying process.
For sellers, Evans said they need to consider whether they will contribute anything toward buyer concessions, before listing the home. This is an important decision when looking to attract buyers.
Evans recommended first considering what the temperature of the market is at that moment. She said it’s tougher to sell a home now than it was two years ago. Then, decide whether they’ll pre-negotiate broker-to-broker compensation themselves. Evans said this information cannot be listed on the MLS, but agents can advertise it on their private websites.
“That is probably the biggest difference now between what was and what is," Evans said. "Prior we were never allowed to negotiate compensation for the agents in the contract. Now that’s exactly where it’s going to be negotiated is in the contract.”
Evans said her best advice for sellers is to have the compensation discussion with their real estate agent up front and to let them advise on how it’ll work best in the current housing market. And be open to negotiation with a good marketing plan.
>> Download the 12News app for the latest local breaking news straight to your phone.
12News at YouTube
Catch up on the latest news and stories on the 12News YouTube channel. Subscribe today.