Starting July 15, 2024, significant changes are being implemented in the New Hampshire real estate market. These changes, stemming from a recent settlement agreement between the National Association of Realtors (NAR) and the U.S. Department of Justice (DOJ), are set to impact how real estate transactions are conducted, especially concerning agent compensation. Although these changes impact both sellers and buyers, the greatest implications are actually for the buyer.
Key Changes in New Hampshire
Removal of Commission Information from MLS Listings
What’s Changed: Offers of cooperative compensation (commissions) from listing brokers will no longer be included in MLS listings in New Hampshire.
Why It Matters to You if You’re a Buyer: Previously, buyer agent commissions were the responsibility of the seller. Although that commission was not fixed, it was required to be some amount greater than $0. The fee sellers were willing to pay was displayed to both agents and the public via the MLS. Now, sellers are no longer required to pay any compensation to the buyer’s agent. Even if sellers are willing to contribute to these costs, this information is no longer public, making it harder for buyers to know how much commission (if any) the seller is willing to pay to the buyer agent.
Mandatory Written Agreements for Buyer Agents
What’s Changed: Before your agent can show you any properties, they must now have a written agreement with you, clearly stating their compensation. There are two types of agreements: one being the “Showing Agreement” which is valid for a very short period of time (7 days or less) and is typically for specific properties. The next level of agreement is the “Buyer Agency Agreement” which is a longer-term, full-service agency agreement.
Why It Matters to You: These agreements have different implications for you as a buyer, and you should ask your agent to fully explain your obligations before signing either. If you do not enter into either agreement with a buyer’s agent, that agent will not be allowed to show you properties.
Current Situation in Massachusetts
Business as Usual for Now
Massachusetts is currently fighting the removal of broker compensation from its MLS. However, agents working with buyers will still be required to have written agreements specifying their compensation before showing properties.
What to Expect: While Massachusetts continues its efforts to maintain its current practices, it’s essential to stay informed about any potential changes that may arise in the future.
What This Means for Home Buyers
Increased Financial Responsibility
As a buyer, you now have to negotiate and potentially bear the full cost of your agent’s compensation. This change can impact your budget and overall financial planning when purchasing a home.
Lack of Transparency
The removal of commission information from MLS listings means less transparency about who pays for what in the transaction. It’s crucial to have open discussions with your agent to understand all costs involved.
What This Means for Home Sellers
Potential for Lower Selling Costs
With the removal of the requirement to offer compensation to buyer agents, sellers may see a reduction in their overall selling costs. You are no longer obligated to cover the buyer’s agent commission, which can represent a significant savings.
Market Competitiveness
Be aware that the changes may affect how competitive your listing appears. Buyers will be more mindful of agent fees, and transparency in your willingness to contribute to these costs could influence buyer interest and offers.
Although these changes are designed to create a fairer real estate market, they do shift some of the financial responsibilities onto home buyers. It’s essential to understand these new rules and how they impact your transaction. If you have any questions or need further clarification, don’t hesitate to reach out to your real estate professional.
Author: Rob LaBrecque
Real Estate Advisor, Professional Photographer, and Marketer