MLS Changes: What Maine Home Sellers and Buyers Need to Know

You may have heard over the last several months that the MLS (Multiple Listing Service) for real estate transactions is about to get a shake-up starting August 17. This shift comes from a lawsuit involving the National Association of Realtors (NAR), and it’s changing how agent commissions work. Let's break it down in a way that doesn’t require a law degree to understand.

The NAR Lawsuit: A Quick Rundown

The NAR faced a lawsuit regarding the handling of commissions. Traditionally, when a home is sold, the listing agent and seller negotiate the commission before listing the home. At that point, the listing agent offers compensation to the buyer's agent.  The lawsuit argued this practice wasn’t always transparent, and could lead to inflated costs.

But many argue that the seller’s asking price already includes this cost, so in the end, it’s the buyer who ends up paying for it through the sale price, even though they don’t give the money directly to their agent.

What’s Changing in the MLS?

As of August 17, 2024, the MLS is required to eliminate and prohibit any offers of compensation in the MLS between listing brokers or sellers to buyer brokers or other buyer representatives.  This means that sellers can choose whether or not to include this compensation at the time they list their home.

Pros and Cons for Sellers:

Pros:

1. Lower Costs: Sellers may save on expenses by not compensating the buyer’s agent.
2. More Control: Sellers have the flexibility to decide on their own terms for the sale.

Cons:

1. Less Agent Motivation: Some agents might be less inclined to show your home if there’s no compensation being offered, knowing their buyers can’t afford the additional cost.
2. Potentially Longer Sales Time: Without that extra incentive, it could take longer to attract buyers, as they may not have the financial capability of paying their buyer agent.

Pros and Cons for Buyers:

Pros:

1. Potential Savings: If sellers are not offering buyer agent compensation, it could lead to more transparent negotiations between all parties.

Cons:

1. Fewer Agent Options: Without a seller's paid compensation, buyer agents may not be willing to represent buyers on certain properties, limiting their options.
2. Increased Costs: If buyer agents aren’t compensated by sellers, buyers might end up having to pay compensation to their agents out of pocket.  Again, buyers may not have the ability to pay this additional cost.

What Does This Mean for You?

For Maine sellers and buyers, this MLS update basically means reassessing your strategies. Sellers, you’ll need to weigh the benefits of offering buyer compensation versus potential impacts on buyer interest. Buyers, be prepared for potential changes in agent dynamics, and consider how this might affect your overall home-buying experience.

As a realtor, I (along with most agents that I have spoken with) will continue to stress the importance of the seller offering compensation to the buyer agent, especially in the current market.

There's no denying it. The current inventory in Maine is low, and interest rates are still inflated. These two factors have driven home prices up, making it difficult for buyers to get pre-approved for a loan and be able to afford a monthly mortgage. If you, the seller, are not offering buyer agent compensation, potential buyers might not be able to afford to put an offer on your home, as they would be required to pay their buyer agent out of pocket. This could seriously affect the foot traffic that goes through your home, resulting in less offers.

The other concern is that buyers will go rogue and attempt to navigate the home-buying process unrepresented by an agent (either due to not being able to afford one or just not wanting to pay for the services), while not understanding the importance of a buyer agent to navigate them through the process.

I tried to write this article as transparently as possible. However, if you're a potential home seller or home-buyer with questions and not currently working with an agent, please feel free to reach out to me here. It's understandable that this may seem a bit complex to you, and I am always happy to help.