Real estate transactions in California face significant changes
CONTRA COSTA COUNTY, CA (August 14, 2024) — Significant changes are on the horizon for California’s real estate market, set to take effect on August 13th. These changes will impact both buyers and sellers, particularly in how compensation is handled and the role of buyer representation agreements.
One of the most notable changes is the elimination and prohibition of any requirement for offers of compensation in the Multiple Listing Service (MLS) between listing brokers or sellers and buyer brokers or other buyer representatives. Traditionally, it has been common practice for the seller, through their listing agent, to offer a commission to the buyer’s agent as an incentive to bring a buyer to the property. This will no longer be mandatory.
This shift is designed to promote greater transparency and fairness in real estate transactions. It allows for more flexible negotiations between buyers, sellers, and their respective agents. Buyers will need to be more informed about the costs associated with hiring a real estate agent, and sellers may find themselves negotiating the buyer’s agent’s compensation directly with buyers through the purchase agreement.
New Requirement
Another key change is the requirement for realtors to have a buyer representation agreement signed with a buyer before working with buyers or showing any properties. This agreement formalizes the relationship between the buyer and their agent, ensuring that the agent works in the buyer’s best interest throughout the transaction.
A buyer representation agreement outlines the services the agent will provide, the duration of the agreement, and the commission structure. It also clarifies the obligations of both parties, helping to prevent misunderstandings and ensuring a smoother transaction process.
Benefit to Buyers
For buyers, signing a representation agreement offers several advantages. First and foremost, it guarantees that the agent is committed to working on behalf of the buyer, providing dedicated support and advocacy throughout the home-buying process. It also ensures that the buyer is fully informed about any commission fees upfront, eliminating any surprises at closing.
Moreover, with a formal agreement in place, buyers can feel more confident that their agent will act in their best interest, providing expert guidance, negotiating on their behalf, and helping them navigate the complexities of the real estate market.
These changes represent a significant shift in the way real estate transactions are conducted in California. Both buyers and sellers should take the time to understand the new rules and how they may affect their real estate decisions. For buyers particularly, signing a buyer representation agreement is not only a new requirement but also a valuable step towards a successful home purchase.
Send questions and comments to jennifer@bhrbroker.com.
Jennifer Stojanovich
Jennifer Stojanovich is a seasoned real estate professional with over 20 years of experience. She is the broker and owner of Better Homes Realty of Clayton, a leading real estate firm in the area. Raised in Clayton/Concord, she has deep roots in the community and currently resides in Clayton with her husband, three children, and two dogs.
A graduate of Clayton Valley High School and Sacramento State University, Jennifer began her career in sales and marketing at Hewlett Packard Company, where she spent a decade excelling and earning numerous awards for her outstanding performance. She joined Better Homes Realty in 2004, leveraging her extensive sales and marketing experience to build a strong and successful team. In 2011, she obtained her broker's license and has since specialized in traditional sales for both buyers and sellers.
Outside of her professional life, Jennifer enjoys spending quality time with her family and friends, hiking, camping, and cheering on her kids at their sports games. Her dedication to her clients and community is evident in her work and personal life.