New real estate rules require homebuyers to detail agent commission terms in writing

HONOLULU (HawaiiNewsNow) - Home sellers and buyers have always been able to negotiate their agents’ commission -- whether it’s a percentage, flat fee or hourly rate. New real estate rules that took effect this weekend simply codify the terms in writing early in the process. But it’s still a major shakeup, so experts say to expect some initial confusion.

Common practice has been for a seller to pay a standard agent commission of 6 percent of the home price -- typically split 50/50 between the listing agent and the buyer’s agent.

Critics say the system lacked transparency and allowed brokers to inflate home prices to boost their commissions. It led to a class action lawsuit that was settled for $418 million earlier this year, outlining changes that took effect Saturday.

“Now the buyers are going to be required to actually sign a buyer’s agreement, and that’s a requirement. We don’t have a choice, and that’s at any point that they’re going to go in and tour a home. So whether they’re doing it in person or if they’re doing it virtually, because many of us do it virtually, so that so my big thing is, be kind to your realtor, because they’re going to be fumbling through this. Safety nets were removed yesterday, and it’s going to be requirement. They’re going to have to have that signed,” said Lance Owens, President-Elect of Hawaii Realtors.

You can still tour open houses casually without an agent, but serious buyers must have a broker agreement that states what services the agent will provide and how the agent will be paid.

Sellers can still offer to pay buyer agents to sweeten the deal, but they no longer can promote those offers on the MLS or multiple listing service.

Cash conscious buyers might be less motivated if they have to pay a commission in an already pricey market, or even force some to negotiate on their own.

But the ultimate goal is to educate and empower consumers -- and it comes ahead of what’s expected to be an interest rate cut by the Federal Reserve.

“I don’t think it’s going to change much in the pricing of the homes with this, with these changes, but I think with the feds coming in with the rates, we’re going to see some, some movement again in the housing,” Owens said.

“Transparency is good, because everybody understands up front that’s been they’ve been working on that for years now.” he added.

For more information, visit facts.realtor.

Copyright 2024 Hawaii News Now. All rights reserved.