The recent National Association of Realtors (NAR) settlement involving the National Association of Realtors (NAR) has sent ripples throughout the real estate industry. These industry changes aim to enhance transparency and clarity around how and why Realtors, like myself, get paid. This settlement maintains the choices you’ve always had regarding real estate services and compensation. Listing brokers and sellers can still offer compensation for buyer broker services, but these offers won’t be communicated through the Multiple Listing Service (MLS)–a local marketplace used by real estate professionals to share information about home inventory in a particular area. As your agent using the MLS, I must enter into a written agreement with you before we start touring homes. This agreement will clarify the services I’ll provide, the value they bring, and their cost, ensuring you fully understand what to expect. I may not accept more in compensation from any source than we agree to in this agreement. This requirement applies to both in-person and live video/virtual tours.

This written agreement, which can be executed in a few different ways to the same effect, will help ensure you understand exactly what services I’ll be providing and the associated costs.

This agreement is negotiable. We can craft a customized agreement to best meet your needs, including how long the agreement lasts, what level of services will be provided, and how I will be compensated.

We don’t want there to be any surprises, and this written agreement helps enhance transparency around my services and compensation. Remember, I cannot collect more in compensation from any source, than is agreed to in this agreement.

However, you don’t need a written agreement for casual conversations at an open house or when asking about my services. Keep in mind, my compensation is completely negotiable, so feel free to ask any questions you have about the process.

What HASN’T Changed?

My commitment to finding your perfect home, negotiating on your behalf, and guiding you through the entire process hasn’t changed. Your protection, being well-informed, and ethical treatment are at the heart of what I do. This settlement maintains the choices you’ve always had regarding real estate services and compensation.

In terms of contracts, written buyer agreements/contracts aren’t new to Minnesota. Buyer representation contracts have been required by Minnesota law since 1993. They have been effectively used for over 30 years to protect buyers. There was little impact on our contracts due to the settlement. The rule changes emphasize the timing of completing these contracts, as we discussed, prior to home showings/tours.

Offers of compensation are critical to helping make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers.

How Will Buyers’ Agents Get Paid Now?

As your Realtor®, I want to let you know that compensation between a seller’s agent and a buyer’s agent is still an option, but it’ll need to be handled outside of the MLS. We can discuss and negotiate these details together.

There are different ways Realtors® can be compensated, which include things like a fixed-fee commission paid directly by the buyer, by the seller, or as a portion of the listing broker’s compensation. The good news is that all of this is negotiable. We can always talk through your options and find the best arrangement that works for you.”

As a Seller, What Do I Need to Know About Compensation After the Rule Changes?

Agents who are Realtors®, like myself, are here to help you navigate the process of selling your home and are ethically obligated to work in your best interest. Let’s be clear: You have choices. I can work with you to understand the full range of these choices when selling your home, which will help you make the best possible decision for your needs.

We have latitude to handle broker compensation in several different ways, though transparency remains key. Our goal is to make it clear, in the form of a written contract, what you will pay to which parties for services rendered. Our contracts have been updated to be in strict compliance with state laws and the settlement agreement rule changes.

As the seller, your listing broker may still compensate the buyer’s broker—this is the way compensation was typically handled before the Settlement rule changes, and it remains an option for sellers. But you are not obligated to do so, and it’s my job to communicate your intent to the buyer’s broker. You may also be requested to pay compensation directly to the buyer broker as a term of the purchase agreement you receive. This is also something which can be negotiated. There are several options available including making no payment of compensation to a buyer broker. We will discuss the best options for you.

Compensation Scenarios

Clarifying Compensation with Buyer Clients

In our current situation, we don’t see any offer of cooperating compensation from the listing broker on the MLS, and they aren’t responding to our inquiries concerning cooperating compensation. We can address compensation through the purchase agreement. We can include a clause asking the seller to pay a specified amount or percentage at closing to cover our services. This amount will be separate from any seller’s contributions to your closing costs, ensuring there’s no confusion with your lender. We’ll clearly outline this in the agreement to protect your interests.

Compensation Negotiation Between Buyer Brokers and Listing Brokers

Even though the MLS won’t display offers of compensation anymore, it’s still completely legal for brokers to share compensation in our state. If a listing broker wants to offer compensation, they can do so through their private website, social media, or even signs at an open house. It’s important to remember that while this data isn’t aggregated anymore, it doesn’t mean offers of compensation are illegal or forbidden. We can still negotiate and secure fair compensation for our services through a broker-to-broker agreement or another written agreement.

Addressing Additional Compensation Needs with Clients

Let’s say we’ve agreed with another broker on a certain level of compensation, but it’s not enough to cover my services as per our buyer representation agreement. We can include a provision in the purchase agreement where a buyer (you) requests the seller to pay an additional amount to cover my services. This request will be separate from other seller concessions to avoid any issues with your loan approval process. We’ll document this clearly to ensure everyone understands the terms and that the total compensation matches our agreement.