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New Rules about Agency

In recent months, there have been many news stories about lawsuits and settlements involving real estate broker commissions.  Like all other industries, real estate is constantly changing and evolving.

One of the main arguments from these cases was that real estate commissions were “fixed” by the real estate industry.  However, particularly here in Boston, that is not accurate.  The commission rates we propose for our engagements are based on several factors (such as inclusion of personal attendance at showings vs. lockboxes, professional photography and video production, marketing and advertising, etc.).  Likewise, other Boston real estate offices offer different commission rates based primarily on the level of services they are willing to offer.

In any event, in the wake of these lawsuits, our industry is implementing several changes to address concerns that were raised.  Among these changes:

  • Written Buyer Agency Agreements – Similar to how sellers are required to have signed listing agreements, which outline the terms and expectations of the seller’s agency engagement, buyers will now need to sign written agreements with buyer’s agents.
  • Compensation to Buyers’ Agents – The amount of compensation being offered by sellers/sellers’ agents will no longer be displayed in MLS.  While there are reasons that this change is being made, it seems somewhat counterintuitive – because this information will no longer be visible to consumers.

In connection with these changes, we are anticipating several scenarios/questions, including:

  • From Sellers: Should I offer a cooperating commission to buyers’ agents?  With the new changes, the choice of whether to allow the listing agent to offer a cooperating commission to buyers’ agents will be clear. Generally, we feel that it is in sellers’ best interests to offer a cooperating commission – for reasons such as larger audience encouraging promotion/participation, ease in buyers’ financing, etc.  However, each scenario is unique and we will discuss options with you.
  • From Buyers: Do I need a buyer’s agent?  A buyer is not required to have a buyer’s agent.  However, a buyer’s agent can bring a tremendous amount of value, including creating a search plan to find your dream home, identifying “off-market”/private listings, evaluating asking prices and recommending offer strategies, preparing an offer, negotiating with the seller/seller’s agent to secure a purchase on the move favorable terms possible and assisting throughout the purchase process.  A buyer’s agent acts as an exclusive fiduciary of the buyer – meaning their duty is to the buyer’s best interests – they are your experienced and trusted advocate in a purchase. 

Over the next several months, we expect revisions and changes to the guidance we have seen so far.  Appeals are still pending and policy changes are still under review.  As final changes are being made to MLS and the standard Massachusetts forms are updated, things will become clearer.  In the meantime, if you have any questions, please do not hesitate to ask.


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