Bulletin 2024-056 National Association of Realtors (NAR) Settlement Overview
Newrez LLC "Newrez" Approved Correspondent Clients; please see details below regarding National Association of Realtors Settlement.
What is it?
In the simplest terms, when agents list homes on the Multiple Listing Services (MLS) databases, they’ll no longer be allowed to include the buyer agent’s compensation. That will support the objective of settlement for Buyers to be able to negotiate their own agents' pay and formalize it in a signed contract.
How will Buyers Agents Be Paid? There are three options:
- Buyer Paid, buyer paying for the Buyer’s Side Agent Compensation Out-of-Pocket. Buyers with cash reserves may choose to pay out of pocket for Buyer Agent commissions. This would be verified assets needed for cash to close.
- Seller Paid, seller may contribute. Seller paid RE Agent Commissions for the buyers is currently allowed for all Conventional, FHA, USDA and VA loans. Smart Series (Non-QM) also allow for this with Newrez. As seller paid buyer commissions is customary, it is not considered a concession, nor does it count towards Interested Party Contributions (IPC) thresholds.
- Hybrid, A buyer and seller can both pay a portion
New Requirement for Signed Agreements between Buyers and Their Agents
A new requirement for signed agreements before home showings is intended to ensure that buyers understand what services their agent will provide, as well as associated costs, creating an opportunity for clearer communication and trust.
The written agreements must include the following:
- A specific amount or rate of compensation the agent will receive
- A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer
- A conspicuous statement that broker fees and commissions are fully negotiable and not set by law
Currently, these agreements are specific to state. It’s critical to view your property state guidelines and approved Buyer Agreement. The agreements may be non-exclusive and time bound. These are both important elements for Buyer consideration and negotiation.
We encourage you to include this buyer/agent agreement with your initial submission so that cash to close can appropriately be assessed and is not a complication closer to closing.
Resources
Zillow’s New Touring Agreement Helps Agents Stay Ahead of NAR Settlement Changes