If you’ve been following real estate news, you might have heard that the National Association of Realtors (NAR) recently lost a major lawsuit, resulting in changes that are set to affect how real estate business is conducted. These changes took effect on August 17, and they have significant implications whether you’re a buyer or a seller in Austin, Texas.
This guide breaks down what these changes mean for you, debunks some myths you might have seen in the headlines, and explains the truth behind the hype. Here’s everything you need to know if you’re planning to buy or sell a home in Austin in the next year.
Key Components of a Real Estate Transaction
Before diving into the changes, it’s important to understand the basics of real estate transactions, which generally involve three main contracts:
- Listing Agreement: This is between the listing agent and the seller, giving the agent the right to market the home and attract potential buyers and their agents.
- Buyer Representation Agreement: This contract is between the buyer and their agent, ensuring the agent represents the buyer’s interests in the transaction. Not all states require this, but it’s standard practice in Texas.
- Sales Contract: This is the agreement between the buyer and seller, facilitated by their respective agents, to buy and sell the property.
Do Buyers and Sellers Still Use Agents?
Despite recent headlines suggesting the “end of buyer’s agents,” the reality is that most transactions still involve agents. In 2023, 89% of real estate transactions included agents on both sides. Agents provide critical guidance in what is often a complex, legally binding, and financially significant process. Only a small percentage (11%) of buyers and sellers choose to navigate this on their own.
Changes to the Listing Agreement: What Sellers Need to Know
Even if you’re buying and not selling, understanding the listing agreement helps you navigate what to expect when making an offer. Traditionally, sellers paid a commission to the listing brokerage, which was often split with the buyer’s agent. In Texas, this has always been clearly spelled out in contracts, but in some states, it wasn’t as transparent.
One of the main outcomes of the NAR lawsuit is that sellers are no longer required to offer any compensation to buyer agents. Previously, sellers had to offer at least a dollar on the Multiple Listing Service (MLS), but now they can choose to offer zero.
What Does This Mean for Buyers?
With these changes, it’s essential for buyers to understand that compensation for agents is fully negotiable. If you’re a buyer, your agent will still work to include their fees in the purchase offer. The goal is to have these costs covered by the seller whenever possible, but in some cases, buyers might need to pay directly, especially if the seller isn’t offering compensation. It’s a shift, but it doesn’t mean buyer agents are disappearing.
Buyer Representation Agreement Changes
In Texas, buyer representation agreements have always been used, but a significant change now is that you must sign this agreement before an agent can show you any homes. This rule was put in place to ensure transparency and compliance with the new settlement rules.
If you’re hesitant about committing, consider starting with a short-term agreement—like a one-day trial—before committing to a longer-term relationship with your agent. This approach allows you to see how the agent works and if they’re the right fit for you.
Why You Still Need a Skilled Agent
With more transparency and flexibility in real estate transactions, the importance of hiring a skilled agent has never been higher. Whether you’re buying or selling, you want someone who understands the market, knows how to negotiate effectively, and can guide you through these new changes.
Remember, choosing the right agent is about more than just finding someone who can show you homes or list your property. Ask about their recent sales, their experience with similar transactions, and their ability to navigate the new rules.
These changes aim to create a more transparent, flexible real estate market. While the headlines may seem alarming, the reality is that agents will still play a crucial role in helping buyers and sellers navigate transactions. As an Austin realtor, I’m excited about these changes and fully prepared to help you make the most of them.
Whether you’re buying or selling, working with an experienced and knowledgeable agent is your best bet to ensure a smooth and successful real estate journey. Reach out today, and let’s discuss how these changes impact your specific situation and how we can achieve your real estate goals together.
