So, I wanted to take a minute to lay out the facts and the implications for buyers, sellers, and how the industry operates.

The intention is to increase transparency across the board, decouple buy and sell side commissions, and create an opportunity for the buyer to negotiate the fee paid for their representation.

In summary, per the settlement agreement, as of August 17, 2024:

• Offers of compensation to the buyer's agent can no longer be advertised or published in the MLS.
• Buyers will need to have a written agreement with their buyer's agent prior to touring a home with them. Note: this type of agreement has always existed (called the Buyer Representation and Broker Compensation Agreement) but wasn't commonly or consistently used in our market.
• Buyer's agents will not be able to collect compensation in excess of what is agreed upon in their agreement with the buyer, even if the seller/seller's agent offers more.

In light of these requirements and what the Department of Justice and other Consumer Advocacy Groups are pushing for, the California Association of Realtors announced last week that they will be implementing the following changes to our standard forms as of July 24, 2024:

• The Residential Listing Agreement will no longer ask for or allow for what we call "cooperating broker compensation," where the seller agrees to pay a total commission (say 5% or whatever amount is negotiated and agreed upon) to the listing broker, and the listing broker offers some portion of that (say 2.5% or whatever is agreed upon) to the buyer's agent as compensation for their services.
  • Will broker-to-broker compensation still be a thing? Perhaps, it has not specifically been forbidden as far as I know, but CAR forms will no longer facilitate it.
• The buyer contract or the "Buyer Representation and Broker Compensation Agreement" (BRBC) is being updated to be easier to understand, limited to a maximum commitment of 3 months, to allow for various levels of exclusivity, and to otherwise better fit the new model of doing things.
• The Residential Purchase Agreement (or the standard "offer form") was already updated to include a section where the buyer can ask the seller to cover the buyer's obligation to compensate their broker as per their signed agreement (the BRBC). That section will remain.

As we sit here in mid-July, we are still allowed to offer buy-side compensation in the MLS, and most listings/sellers still are. But some are not! They are saying that they will consider it as part of the offer and ask to see the buyer's agreement with their agent (the BRBC).

Many of us agents who represent buyers have started to implement a buyer representation agreement into our business practices with our buyer clients, but certainly not all.

We'll see exactly how this all plays out, but it seems to me that there will be a significant decline in the number of sellers offering to cover the buyer's agent's commission at the outset of the listing. Instead, it will be negotiated as part of the purchase offer.

My fear is that these changes will increase the number of buyers who purchase without any representation at all because they don't have the money to pay for it or they don't understand the value of a great buyer's agent.

A good buyer's agent does so much more than just send listings and open doors. Just in the last ~45 days, I have done the following for my buyer clients as their agent:

• Gotten 3 offers accepted in multiple offer scenarios.
• Sourced and shared multiple off-market listings with buyer clients.
• Completed a dozen different comparative market analyses to assess property values.
• Coordinated, attended, and interpreted dozens of different property inspections of various types.
• Successfully negotiated $210,000 in credits and price reductions for clients in escrow.
• Helped make sense of HOA documents, Title Reports, disclosures, rent control implications, financing options, etc.
• Explained, wrote, and negotiated hundreds of pages of contracts.

I love working with buyers and helping them find their homes. If you or anyone you know is looking for someone to guide, advise, and advocate for them in their LA home purchase, I would love the chance to interview for the job!

If you have questions about these changes, please do not hesitate to reach out! I'd be more than happy to discuss!