As you may have heard, recent developments in the real estate industry following a significant lawsuit involving the National Association of Realtors (NAR) are bringing about notable changes to the way transactions are conducted. These changes will impact both buyers and sellers in upcoming real estate deals, so I wanted to share some key points and specific considerations to help you thrive in this evolving landscape.

For Buyers:

1. Buyers Agreement Required:  Prior to showing a home to a Buyer, either in-person or virtually, an Agent must have a signed Buyer representation agreement with Buyer on file.  Buyers can still peruse open houses without being represented by an agent or having signed a Buyers representation agreement.
2. Potential shift in Commission Payments: Historically, the seller typically covered the commission for both their agent and the buyer's agent. Following the lawsuit, buyers might be asked to pay all/part of their agent’s commission directly, which could impact your overall budget. It’s important to discuss with your agent in advance how to handle a situation where the Seller will not cover all of Buyers agent compensation. 
3. More Control Over Agent Fees: As a buyer, you may have greater control over how much you pay your agent and more room for negotiation. This allows you to ensure that the service you receive aligns with the fee you’re comfortable paying.  In Hawaii, Buyer’s agent compensation can now be negotiated on Purchase Contract in Section C-4.  It’s crucial to work with an agent that can negotiate to put you in the best possible position, which could have the Seller paying all of the Buyer’s Agent commission.
4. Comparing Agent Services: With greater transparency around commission structures, this is an opportunity to compare agents not only on price but also on the services they provide. Be sure to assess the value an agent brings to your home-buying process, from negotiation expertise to local market knowledge. 

Gone are the days where Buyers decide to work with a Buyer’s Agent with little regard to their experience. Now it is crucial for you to “hire” a Buyer’s agent just as you would a listing agent to sell your home.  I’ve worked with lots of Buyers agents and Property Managers around the country for personal investments, while also referring clients out to trusted agents all over the mainland.  I always recommend evaluating potential agents on Experience, Education, Local Expertise, and Trust, while also ensuring that you’re a good personality fit.  Choosing an agent with great negotiating skills is key!

More detailed info can be found here:

Homebuyers: Here's What the NAR Settlement Means for You

For Sellers:

1. Changes in Commission Offers: You may no longer be required to offer a commission to the buyer’s agent, which was standard practice in the past. This could potentially reduce your selling costs. However, be mindful that offering competitive compensation to buyer agents may still help attract more buyers to your property and may generate higher net proceeds to you.
2. Impact on Marketability: The new rules could affect how attractive your listing is to buyer agents, who might prioritize homes with higher commission offers. It’s essential to weigh this factor when deciding on your commission strategy.
3. Transparent Negotiations: Sellers will need to be transparent and strategic when discussing commissions with both their listing agent and potential buyer agents. This shift offers an opportunity for more customized negotiation but requires careful consideration to ensure your home remains competitive in the market. 

The updated Honolulu Board of Realtors listing agreements gives Sellers 3 options regarding compensation to Buyers Brokerage Firm:  1).  Compensation will be made by Seller through Listing Brokerage Firm in amount of ______. 2).  Compensation will be made by Seller in amount of ______. 3).  Seller will negotiate Buyer’s Brokerage Firm compensation, if any, through the Purchase Contact.  We are generally recommending that Sellers choose option 3, as it puts them in the strongest negotiating position.  It does not “show their hand” to Buyers Agents and has the potential to save the Seller money.

More detailed info can be found here:

Home Sellers: Here's What the NAR Settlement Means for You

Next Steps:

Whether you’re planning to buy or sell in the near future, understanding these changes is crucial to making informed decisions. There has been quite a bit of sensational news articles and general misinformation on social media regarding these changes.  It’s important to understand the facts.

These changes went into effect on August 17, 2024 Nationally and the Honolulu (all Oahu) Board of Realtors implemented changes effective August 12, 2024.  Just over two weeks into this new normal and it is clear that our industry as a whole is unprepared to navigate these changes with ease.

If you have any questions or would like to discuss your specific situation further, please feel free to reach out. I am always here to assist you.  I will ensure you understand all your options and help you develop a strategy that aligns with your goals.

Contact Chip Lewis, MBA, R, at (808) 248-2521 or [email protected], https://chiplewishomes.com today for a consultation!