It’s been a month since new real estate rules rolled out nationwide, following the National Association of Realtors (NAR) lawsuit, and many in Illinois are still trying to make sense of what’s changed. Whether you're considering buying or selling a home, it’s easy to get confused by all the miscommunication. We want to simplify the key changes and help you understand what they mean for buyers and sellers in today’s market.
Photo Courtesy of Tina Ginter Photography
The Key Shift: Realtor Compensation Has Changed
At the heart of these new rules is a significant change in how realtor compensation is structured. Traditionally, when a seller listed their home, they would negotiate compensation not only for their listing agent but also for the buyer’s agent. Essentially, the seller covered both agents' fees.
Under the new rules, however, compensation for the buyer’s agent is no longer tied to the seller’s agreement. Buyers now negotiate compensation directly with their own agents, which is a major shift from previous practices.
Photo Courtesy of VHT Studios/31 Riderwood
The Buyer Representation Agreement
One of the most important aspects of the new rules is the introduction of the Buyer Representation Agreement. Now mandatory nationwide, including here in Illinois, this agreement formalizes the relationship between buyers and their agents. This agreement spells out the compensation that the buyer agrees to pay their agent, either as a flat fee or a percentage of the purchase price.
While this might initially sound like an extra cost for buyers, the financial impact can often be reduced—depending on how the seller structures their listing.
How Sellers Can Still Help: Buyer Incentives
Although the new rules make buyer agent compensation the responsibility of the buyer, sellers can still offer “buyer incentives” to help cover some or all of these costs. Here’s how it works:
1. Full Seller-Paid Compensation: The seller offers to cover the buyer agent’s compensation entirely, meaning the buyer has no out-of-pocket expenses for agent fees.
2. Partial Seller Contribution: The seller may offer to cover part of the buyer agent’s fees, with the buyer covering the difference. For instance, if the seller offers 2% and the Buyer's Representation Agreement specifies 2.5%, the buyer would cover the remaining 0.5%.
3. No Seller Contribution: In this case, the buyer covers 100% of the buyer agent’s fees.
What Buyers Can Do
If you’re a buyer concerned about these new rules, don’t worry—there are ways to minimize your financial impact. For example, if the seller isn’t offering enough buyer agent compensation, your agent can negotiate for the seller to cover more as part of your offer.
You can also focus your home search on properties where the seller offers a buyer incentive, reducing or even eliminating out-of-pocket costs.
Why Sellers Might Still Offer Incentives
For sellers, offering buyer incentives can be a smart strategy. By covering all or part of the buyer agent’s fees, sellers can attract more buyers and possibly receive stronger offers. We’ve seen how this can create a win-win situation—buyers save on out-of-pocket expenses, and sellers benefit from increased interest in their property.
Photo Courtesy of VHT Studios/671 Old Barrington Road
Navigating the New Real Estate Landscape
The recent changes in real estate compensation mean that both buyers and sellers need to approach transactions with more awareness and strategy. At The Blackshaw Messel Group, we’re here to guide you through this new landscape. Whether you’re buying or selling, having an experienced real estate team on your side makes all the difference.
If you have any questions about how these changes affect your real estate plans, don’t hesitate to reach out. We’re here to help you navigate the market with confidence!
Photo Courtesy of Tina Ginter Photography
