The National Association of Realtors (NAR) has recently introduced new regulations that will significantly change how real estate commissions are handled. These changes are poised to impact not just buyers and agents, but home sellers as well. As a seller, understanding these new rules is essential to ensure you’re prepared for the changing landscape of real estate transactions.

In this post, we’ll break down the key aspects of the NAR commission regulations and explain how they may influence your home sale.

What Are the New NAR Commission Regulations?

The NAR’s new rules focus on increasing transparency in real estate transactions, particularly when it comes to how commissions are structured and paid. Historically, the seller’s agent would offer a portion of their commission to the buyer’s agent, and this amount wasn’t always visible to the buyer. Now, the new regulations require that the buyer be made fully aware of what commission their agent is earning.

The key changes include:

• Full Disclosure of Buyer Agent Commissions: Buyers will now know exactly how much commission their agent will earn, which could influence how they negotiate during the transaction.
• Increased Negotiation Leverage for Buyers: Buyers may start to negotiate their agent’s commission or even opt to represent themselves, which could lead to more complex negotiations for sellers.
• Potential for Commission Restructuring: Sellers might need to adjust how they structure their listing commissions to remain competitive in this new environment.

How Will These Regulations Affect Sellers?

While the regulations bring more transparency to the commission process, they also introduce new dynamics that sellers must be prepared for. Here’s how these changes could affect your home sale:

1. More Transparent Commission Structures In the past, sellers would negotiate the total commission with their agent, who would then split a portion with the buyer’s agent. Buyers were often unaware of how much their agent would receive. Under the new regulations, buyers will have full visibility into this commission structure, which could lead to more buyer scrutiny on the commissions being offered. As a seller, you’ll need to be prepared for buyers to negotiate not only the price of the home but potentially the commissions involved as well.
2. Buyers Representing Themselves One of the more significant outcomes of these new rules is the possibility that more buyers will choose to represent themselves in a transaction to avoid paying commission to a buyer’s agent. This can create a different type of negotiation dynamic. While representing themselves may save buyers money on commission, it could complicate the transaction, as they may not have the same level of expertise or understanding of the process as a professional agent.
3. The Need for Creative Commission Solutions With these changes, you may find yourself needing to think creatively about how commissions are structured to attract buyers and their agents. Offering a competitive commission to the buyer’s agent can still be an effective strategy to ensure that agents are motivated to show your property. Sellers who are flexible and open to new commission structures may be better positioned to navigate the evolving landscape.
4. More time Spent with your Agent Negotiating Offers The NAR regulations now mean that each deal is negotiable in regards to commission as opposed to havng a blanket commission offered to the buyer's agent. This means that you can get creative with how you structure the buyer's commssion, but it means that each offer should be scrutinized with your agent to ensure that you are making the best choice when selecting a buyer.
5. A Fragmented Real Estate Market The new regulations could lead to a more fragmented real estate market. With increased transparency, more buyers may choose to explore multiple platforms beyond the MLS (Multiple Listing Service) to find properties. As a seller, this could mean needing to market your property across different platforms and ensuring you’re reaching a wide audience. This fragmentation may result in a more competitive market, but also potentially a more confusing one for consumers. Right now, NAR restricts you from listing anywhere other than the MLS if you choose to list on the traditional MLS, so do not expect to see this change occur immediately, but could be in the near future.

Strategies for Sellers in a Changing Market

As these regulations reshape the real estate market, sellers need to be proactive and adaptable. Here are some strategies to help you navigate the new commission rules:

1. Offer a Competitive Buyer Agent Commission
   While buyers now have more transparency, offering a competitive commission to their agent remains an important tactic. This incentive ensures that agents continue to prioritize showing your home to their clients, increasing your chances of a successful sale.
2. Work with an Experienced Agent Having a real estate agent who understands the new regulations and knows how to structure a transaction that benefits you is critical. An experienced agent can help you navigate buyer negotiations, including handling requests related to commissions and structuring deals that work in your favor.
3. Be Prepared for Buyer Negotiations With buyers potentially looking to save on agent commissions, expect more detailed negotiations about who covers these costs. You may need to negotiate seller concessions or other incentives to make your home more appealing while still ensuring a fair deal.
4. Get the Inspection done upfront Buyers are looking to have more transperency in the transaction as well as cut down costs now that they may be liable for their agent's commissions. by getting the inspection done upfront, this may bring more buyers in to view your home and feel more comfortable making an offer with or without an agent representing them.
5. Adjust Your Marketing Strategy The potential for a more fragmented market means that sellers may need to cast a wider net. Listing your home on multiple platforms, leveraging social media, and employing a targeted marketing strategy can help you reach more potential buyers, particularly in a market where buyers are exploring alternatives to traditional MLS listings.

The new NAR commission regulations bring greater transparency to real estate transactions, which is ultimately beneficial for both buyers and sellers. However, these changes also create a more complex environment for sellers, with increased buyer negotiation leverage, the potential for more self-representation, and a fragmented market. 

By staying informed and working with an experienced agent, sellers can adapt to these changes and still achieve a successful sale. At REALgratitude, we are committed to helping sellers navigate these new regulations and structure their transactions to maximize value. If you have any questions or need assistance with your home sale, feel free to reach out to me at barkley@realgratitude.org