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The role of real estate brokers in Massachusetts has changed.

On Behalf of | Apr 5, 2024 | Firm News |

The role of real estate brokers in Massachusetts has undergone significant changes recently. A landmark $418 million settlement with the National Association of Realtors (NAR) has introduced reforms that are expected to transform the American real estate market. This settlement, approved by a federal court, eliminates the standard 6% commission traditionally paid by seller and split between the seller’s and buyer’s agents. Now, sellers are not obligated to propose compensation to prospective buyers’ agents, which could lead to more competitive pricing and potentially lower costs for homebuyers.

Furthermore, homebuyers must now sign an explicit agreement with a broker before starting to work with one, which may lead to many forgoing brokers altogether. These changes are expected to foster a more competitive market environment.

In Massachusetts, brokers are still required to be properly licensed, present all offers to the seller, maintain records of funds in escrow accounts, and provide agency disclosure forms that describe the nature of the relationship between the parties involved. However, the recent settlement is likely to influence how these roles are executed moving forward, as the industry adapts to the new regulations. It is expected that broker contracts will explicitly state how the seller’s broker is to be paid and will not include any money to be paid by a broker representing the buyer.

If a buyer wants to use a broker then they must enter into a separate agreement with the broker and specify how much the broker is to be paid and who is to pay their fee. The buyer may negotiate with a seller for the seller to pay the broker fee or reduce the sale price in an amount equal to the buyer’s broker’s fee. The changes in broker compensation are expected to change sellers’ marketing strategies.

The real estate landscape is evolving, and both buyers and sellers in Massachusetts will need to navigate these changes with a clear understanding of the new rules and how they impact the traditional broker-client relationship. Buyers and sellers of real estate should consult a lawyer to discuss broker compensation before contracting with a broker.

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