There’s an Earthquake coming up in Residential Real Estate starting from New York
In real estate, all eyes on New York City where, starting on January 1, 2024, in arguably one of the most important residential real estate markets in the world, not just in the US, offers of compensation to the buyers’ brokers must come directly, clearly and in writing, from the sellers of the property. Applicable to new listing agreements or to extensions and renewals of older ones, the broker/agent of the buyer must be able to accept, reject or negotiate the fee. Listing Brokers will no longer be permitted to make the offer of compensation to the buyers’ agents and brokers – even if it is on the homeowner’s behalf. Additionally, Listing Brokers will no longer pay the buyers’ brokers fees. In case of no offer of compensation to the buyers’ broker by the seller, a fee can be negotiated between the buyers and their agents/brokers. The fee can replace the sellers’ compensation if the buyers’ broker deems it unacceptable.
There are other impactful changes that are coming up, this is just one that could radically change the way residential real estate is brokered, or isn’t; the fact that the homeowner may not offer any compensation to the buyers’ agents and the fees would have to come from the homebuyers themselves, is so radically different than what we have been used to for decades, and financially and visibly impactful, that many more buyers may decide against representation. This could lead to awkward transactions, as the new reality sets in and all parties get used to it, especially on the buyers’ side. However, it would put the US more in line with how the same activity is disciplined and practiced in many other countries, including ones that have a similar real estate market, culture and practices.
Some time will be required for stabilizing and somewhat standardizing residential real estate transactions and the marketing of homes, this is just the first market that starts out with the new rules, and that’s why everyone in the real estate industry is going to monitor closely how the new way is going to work. There are surely new opportunities as the old ways are being phased out.