The new regulations in the US real estate market in 2024 have brought significant changes to the home buying process and commission structure, reshaping the market competition environment and affecting ordinary buyers and sellers. Next, we will elaborate on the specific changes that have occurred in the commission structure and home purchase process

With the opening of 2024, the US real estate market has entered a new stage, and the introduction of a series of new regulations is like a giant stone thrown into a lake, causing ripples and having a profound impact on the entire market. These new regulations have not only reshaped the home buying process, but also made significant reforms to the commission structure, thereby significantly changing the market competition environment. Whether ordinary buyers with dreams of buying a house or sellers who hope to sell their houses smoothly, they have personally felt the impact of these changes. Today, Xiaoqiao will lead everyone to deeply understand the specific changes that have occurred in the market under this wave of new regulations.

Changes in commission structure

Before the implementation of the new regulations in the real estate market, the presentation of the entire commission structure was relatively fixed. When seller brokers list property information on MLS (Multi Listing Service System), the commission rate is displayed to the public as an open and transparent part.

Normally, sellers are required to bear a commission of 5% to 6% of the total selling price, which is used to cover the service fees of brokers for both buyers and sellers. Take a property priced at $1 million as an example, according to this ratio, the commission fee can be as high as $50000 to $60000. Moreover, this expense is often not separately listed, but indirectly included in the housing price, which to some extent pushes up the market transaction price.

However, the implementation of the new regulations is like a heavy hammer, completely breaking the original commission pattern. The new regulations clearly stipulate that MLS platforms will no longer allow the display of commission information that sellers are willing to pay to buyer brokers. This measure is of great significance as it gives new flexibility to commission payments.

Specifically, although the seller and their agent can still choose to bear the cost of the buyer's agent, the entire negotiation process needs to shift from being open and transparent to being conducted privately. Both parties need to reach a consensus on commission payment through private negotiations. The direct impact of this transformation is that buyers may face a new situation where they need to bear the cost of cooperating with their own brokers, making the fee structure of brokerage services more flexible and personalized.

However, it is worth noting that although the new regulations have officially come into effect, the current mainstream trading model in the market still tends to continue the previous practice, which is for sellers to continue to bear all commission fees.

This is mainly determined by the fact that the market is in a transitional period. On the one hand, many listing contracts for real estate sales have already been signed before the new regulations were introduced, and the commission clauses in these contracts cannot be adjusted immediately at present; On the other hand, the current real estate market situation is gradually tilting in favor of buyers. In this situation, sellers often choose to continue bearing commission costs in order to accelerate the speed of property transactions and attract more buyers to pay attention to their properties.

Changes in the purchasing process

At the same time as the commission structure has changed, the purchasing process has also undergone significant changes. The new regulations require buyers to sign a legally binding agency agreement before enjoying broker guided viewing services.

The importance of this agency agreement is self-evident. It is not only the cornerstone for establishing a cooperative relationship between the buyer and the broker, but more importantly, it clearly and explicitly defines key content such as the broker's service scope, compensation mechanism, and potential cost sharing.

This also means that if the seller refuses to pay the broker's commission, the buyer needs to be mentally prepared in advance and bear the cost themselves.

Faced with such new regulations, we offer some suggestions to buyers. Before officially signing with the agent, buyers can actively participate in the Open House event and accumulate relevant experience through independent house viewing. When it is finally decided to cooperate with a broker, it is necessary to carefully review the contract terms, especially those crucial terms such as commission payment, service content, and contract termination, in order to ensure that one's legitimate rights and interests are fully protected. Meanwhile, a thorough understanding of the conditions and procedures for contract termination is also an essential preparation for every homebuyer in the process of purchasing a house.