Starting Saturday, August 17, 2024, new rules will take effect regarding real estate commissions.
The change comes as part of a settlement of class action lawsuits filed by homeowners against the National Association of Realtors.
Those lawsuits claimed homeowners were forced to pay inflated commissions to sell their homes.
The National Association of Realtors has denied any wrongdoing.
"As a result of the NAR settlement, buyers are going to be asked to sign a representation agreement with the brokerage where their agent works," real estate Lawyer Heather Neveu with Chilton Yambert Porter LLP said. "It's going to be an agreement where the buyer is agreeing to compensate the realtor for the work they're performing.
Part 1 - Our Chicago: New Rules For Real Estate Commission
Co-Founder of Weinberg Choi Residential Tommy Choi said this type of agreement is not new.
"It's something that's always been around, a buyer-broker agreement," Choi said. "It's something most real estate agents have practice. Now, it's just something that's going to become even more clear. And part of the process when it comes to homebuying."
Part 2 - Our Chicago: New Rules For Real Estate Commission
"I think it's going to be a short-term thing because I don't think it was wisely used," Neveu said. "I think there might just be a learning curve involved as buyers are going to be now across the board shown this agreement. The responsibility for paying their realtor is now going to shift to the buyer where before an agent representing a buyer was able to honestly tell their client you don't have to pay me."
She added that buyers are now going to have to learn about their options concerning how realtors are paid.
Another change is the offers of compensation, which can no longer take place on the MLS.
Choi explained there's been a lot of misinformation about these changes.
"The biggest thing is that consumers think commissions go away. Sellers don't have to pay the buyers. They never really had to. It's in their best interest because if they don't it limits the buyer pool. And the biggest challenge this could pose in that situation, is affordability for a buyer," Choi said.