What the NAR Settlement Means to Minneapolis Duplex Sellers
If you’re thinking of selling your Minneapolis or St Paul duplex, triplex, or fourplex, you may be wondering what the recent changes as a result of the National Association of Realtors (NAR) settlement of litigation related to how property sellers paid broker commissions mean to you.
The first change is buyers will now be responsible for paying their Realtors commission. In Minnesota and many other states, this was already the case. However, this amount was reduced by any amount the seller’s broker offered to the buyer’s broker for bringing a buyer who ultimately purchased the property. This commission was included as part of the selling price.
Here’s how that’s changed.
Prior to the settlement, the commission a seller’s broker was offering to contribute to the buyer’s agents commissions was publicized on the Multiple Listing Service. This is no longer allowed.
And while the amount of commission a seller offered to the buyer’s broker was always negotiable, now the method of paying it is also negotiable.
Sellers may choose to do one of the following:
- Pay a pre-determined percentage commission, and authorize their Realtor to disclose this amount to buyer’s agents who inquire.
- Not agree to an amount when listing the property and if a buyer asks for it in a purchase agreement, negotiating it at that time.
- Require the buyer to pay their agent out of pocket.
In reality, when a buyer’s broker’s compensation was disclosed on the MLS, in reality, it was the buyer who paid it, as it was simply included in the purchase price which allowed them to finance it as part of their mortgage. Post settlement, it will likely be the same. And if the seller refuses, buyers may choose to reduce their offer by that amount, as two parties cannot save the same commission.
Additionally, the seller may choose whether to have their agent’s broker (office) pay the buyer’s agent’s broker directly, or to have the funds transferred from them to the buyer’s broker out of the seller’s proceeds at closing.
Confusing? Yes. But as we all get more familiar with a new system, it should get easier.