T
he spring home-buying season may be months away, but buyers and sellers have reason to take action now. Mortgage rates are trending downward: a 30-year fixed-rate mortgage had an average interest rate of 6.35% in early September, down from 7.12% a year earlier. Additionally, a recent settlement between the National Association of Realtors (NAR) and real estate industry stakeholders has led to new requirements for real estate transactions that could save buyers and sellers money.

    The settlement stemmed from class-action lawsuits alleging that the practice of requiring seller's agents to specify commissions artificially inflated real estate costs. While the NAR denies these allegations, it has agreed to implement changes aimed at making commissions more transparent. Under the new rules, listing agents are prohibited from offering commission splits to buyer's agents on Multiple Listing Services (MLS). Sellers can now negotiate a fee with their agent and decide whether to pay the buyer's agent.

    Buyers who work with a buyer's agent will be required to sign an agreement detailing how much they'll pay for services. The money can come from the seller, the buyer, or the seller's agent, depending on the terms negotiated. This change could lead to lower home prices in the long run, as buyers haven't paid commissions directly but have absorbed them through higher sale prices.

    Buyers who use a buyer's agent will be the first to notice these changes, as they'll need to sign written agreements outlining commission payments. To protect themselves, buyers should review contracts carefully and avoid committing to long-term exclusive contracts until they've viewed several homes. Zillow recommends signing a seven-day touring agreement before entering into a contract with an agent.

    When reviewing a contract, look for red flags such as requirements to compensate agents before becoming clients or provisions combining compensation for listing and buyer's agents. It's essential to work with reputable real estate agents who provide clear contracts and are willing to discuss terms. Researching agents through websites like Zillow and Realtor.com can also help identify competent professionals.

    For sellers, the new rules offer flexibility in deciding whether to pay a buyer's agent or broker. This decision depends on local market conditions and whether paying an agent will make your home more attractive to potential buyers. Your real estate agent must receive your approval for any agreement with a buyer's broker, and terms must be disclosed in writing.