On Saturday, August 17, a new set of rules was issued by the National Association of Realtors that will change the way Realtors get paid and who pays them. It’s the biggest change to the rules we’ve seen in our lifetimes, and some people are concerned this will have a huge impact on how we buy and sell homes.

While that remains to be seen, it has created serious confusion about whether real estate commissions, specifically buyer’s agent compensation, was ever negotiable. The fact is, the fee has always been negotiable. Previously, the seller’s agent would negotiate compensation, including a percentage for a prospective buyer’s agent, as part of the listing agreement, and it would then be notated in the Multiple Listings Service. With the new rules, buyer’s agents will not have compensation information immediately available to them. And if the seller does not plan to compensate the buyer’s agent, then the buyer’s agent will be asking their buyer for compensation.

Several contract forms have been updated as of Aug. 15, 2024. This includes the Exclusive Right-to-Buy contract and the Brokerage Disclosure to Buyer — Definitions of Working Relationships. Your Realtor may now ask you to sign, or at a minimum, discuss these forms with you prior to viewing property. If you’ve seen the Exclusive-Right-to-Buy before, you will notice a change to the section covering buyer agent compensation. Specifically, if the seller isn’t paying the buyer broker’s fee, the buyer will be obligated to do so and therefore may decide they do not wish to see certain properties if they will be responsible for paying compensation to the buyer broker outside of the transaction.

Previously, the thought was that “the seller pays the fee” — and therefore, the buyer doesn’t need to. But this has always been an erroneous interpretation. Prior to signing an agreement with the listing agent, the seller will factor in all of their expenses and closing costs, including broker’s compensation, when considering the asking price. Given that the buyer is the one funding the closing, the buyer is effectively compensating agents, along with any other parties and settlement fees involved, at the closing table. So, in many ways, the buyer always “paid the fee.”

According to the National Association of Realtors, 89% of buyers purchased their home through a real estate agent or broker in 2023. Buyers typically searched for 10 weeks and looked at a median of seven homes. And 90% of recent buyers found their agent to be a useful information source. 

But what’s even more important is your buyer’s agent has more obligations to you than any other Realtor who is treating you as a customer — i.e., the listing broker hosting the open house you’re attending. Your agent is a fiduciary, maintaining your confidentiality and providing open and honest communication and advice to support you in your purchase. The agent hosting that open house, on the other hand, actually owes fiduciary responsibilities to the seller to obtain the highest and best price for their client, the seller. Using a buyer’s agent often translates to very real scenarios of buyers saving very real time and money, avoiding headaches and arriving at a smooth closing. My point here is you still want a buyer’s agent representing you in your purchase and advocating for you.

In the Roaring Fork Valley, your buyer’s agent is an excellent resource for getting to know our seasonal resort market. (And, with our expert skiing skills and passion for the great outdoors, we are arguably much cooler than Realtors in other places. But I digress.) The nature of our market makes for a tightly knit real estate community of professionals who understand the quirks of purchasing in various neighborhoods, along different ski slopes, among the many single-family, condo-hotel, fractional and new construction opportunities. There is much to consider, and many times the buyers are not in town often enough to explore on their own or conduct their own research. Upon execution of the contract, your local buyer’s agent will take you through every step of the transaction and prepare you for the closing process by assisting with inspections and due diligence, anticipating important dates and deadlines, assembling the closing team to keep you on track and advocating for you at every turn.

Yes, there may be a few unintended consequences of the recent changes, but ultimately anything that brings more transparency to our industry is a good thing. Here’s my humble opinion: While it may seem that the real estate industry’s regulations have shifted, the norms of our business haven’t really changed. The logistics of agent compensation will remain the same — with debits and credits accounted for by the title company at the closing table. In my estimation, most sellers will continue to offer buyer’s agent compensation, and buyer’s agents will continue to be compensated through the transaction. 

But don’t be surprised, moving forward, when your Realtor says, “Before we continue the search, please review and sign this agreement.”