Suzanne Potter, reporter/producer, California News Service, a bureau of Public News Service.
Big changes are imminent in the way homes are bought and sold in California. That’s because some new required forms for transactions came out a few days ago.
The forms are linked to the proposed legal settlement by the National Association of Realtors. This settlement ends the long-standing practice of having a home seller’s agent pay a commission to the buyer’s agent. It benefits buyers who may not have saved up enough money to pay their agent.
How the new method works
George Lopez, a real estate agent in Indian Wells, explains buyers must now negotiate a separate contract to hire and pay their agent.
“Even with these changes, a buyer can still purchase a home without having the money to pay their agent,” Lopez explained. “The general public needs to understand that the real estate commissions have been, and will always be, negotiable – and that if they don’t have money to pay their agent, they can still potentially negotiate it in their sale.”
How the changes benefit buyers
The lawsuit claims the old way of selling homes tended to drive up costs. Thus, giving buyers’ agents had more incentive to steer people to sellers willing to pay a higher commission. The changes are intended to empower homebuyers to negotiate for a better deal.
Lopez thinks most sellers will still offer to pay a real estate broker rather than risk losing out on a big chunk of the prospective buyer pool. But this will have to be negotiated in the offer, as commissions will no longer be stated in the Multiple Listing Service. The changes also mean buyers’ agents cannot just meet prospective clients “on the fly” anymore to go check out a home for sale.
“You have to meet me at the office; we have to have a meeting,” Lopez pointed out. “We have to have an agreement in place that said that you’re hiring me, or I can’t show you any homes.”
Changes take effect nationwide next month.
The new forms real estate agents use to complete transactions will take effect nationwide on Aug. 17.
