The real estate industry in Washington State has experienced significant changes over the last few years, especially in terms of transparency and compensation negotiations. If you're in the market to buy or sell a home, it's essential to understand these updates and how they affect your transaction. At Infinity, we stay ahead of these changes to provide you with the best service possible. Below, we’ll break down the key points and answer how these developments impact you directly as a buyer or seller.
A Brief Overview of NWMLS and Agency Law Changes
In 2019, the Northwest Multiple Listing Service (NWMLS) eliminated the requirement for sellers to offer compensation to the buyer’s broker. This change allowed more flexibility for both parties. Fast forward to 2022, additional changes gave buyers, sellers, and brokers even greater room to negotiate compensation. Beginning January 1, 2024, Washington’s updated Agency Law mandates that brokers enter into written service agreements from the outset when working with a buyer or seller. This ensures transparency regarding compensation and the broker's role in the transaction. In mid-August 2024, NWMLS further revised its forms to ensure sellers are fully aware of their options when it comes to compensating the buyer's broker. These options include choosing to offer no compensation, offering a specific amount, or leaving it to the buyer to include in their offer. These changes align with NWMLS’s ongoing commitment to transparency and fair market practices. Unlike the National Association of Realtors (NAR), which has proposed limiting transparency around broker compensation, NWMLS has prioritized consumer choice, ensuring a more open and competitive marketplace—especially benefiting first-time homebuyers and those in protected classes.
What Do These Changes Mean for You?
Buyers: Navigating Broker Services Agreements
If you're a buyer, before touring any properties, you will be presented with a buyer broker services agreement. This agreement outlines our services, the value we bring to your home search, and the compensation we expect if you purchase a home through us. One flexible option is the Non-Exclusive agreement, which allows you to hire us on a short-term "trial" basis. This gives you time to evaluate whether we're a good fit for your needs. As for compensation, if the seller isn’t already covering it, we can negotiate it as part of your offer. In most cases, sellers are still paying the buyer broker’s compensation, minimizing your out-of-pocket expenses at closing. However, some buyers prefer to pay their broker directly at closing for financial or tax reasons, and we can accommodate that as well.
Sellers: How to Handle Buyer Broker Compensation
As a seller, it’s important to understand the options available for compensating a buyer’s broker. While you haven’t been required to offer compensation for several years, this practice is now more widely recognized and publicized. In today’s market, you want to be competitive and make sure that your sale progresses smoothly once under contract. A skilled buyer’s broker can add significant value to the transaction and reduce your post-closing liability. One of the more popular options available in the revised forms is the "Request in Offer" box, which allows you to consider compensation as part of the overall contract negotiation—similar to how you’d approach closing costs or inspection repairs.
The Benefits of Transparency and Flexibility
These recent changes provide greater transparency for both buyers and sellers, allowing for more informed decisions. Buyers and sellers now have the opportunity to negotiate compensation and work with brokers who offer the best service for their needs. At Infinity, we welcome these updates and believe they will positively impact the real estate marketplace by fostering a more competitive and consumer-friendly environment.
Have Questions? We’re Here to Help!
As always, we’re here to answer any questions you may have about these changes or any other real estate concerns. Whether you’re buying or selling, Infinity is dedicated to guiding you through every step of the process.
