With the NAR settlement bringing new rules to how real estate agents may publicize listings and their willingness to share commissions with a buyer's agent, it's worth looking at the specific details of each property and each transaction separately.
The NAR settlement means that MLS systems may no longer publish co-op commissions within the Realtor systems. So, a buyer's agent may no longer simply check the MLS before showings to be sure of their compensation ( under a policy called " Clear Cooperation"). Now, a buyer's agent must specifically ask if a commission is being offered to buyer's agents. Why the change, you might ask. It's because certain authorities have been convinced and the courts agreed that many sellers of residential properties have not been clear about who pays the agents for buyers and for sellers of home in the USA. In fact, most listing agreements ( signed by sellers as part of hiring an agent) specify exactly how much commission will be paid at settlement to the agency which handled the marketing for the sellers, and how much of that they share, or " Co-op" with a buyer's agent. Because of this, the buyers did not pay commissions directly, and were paying through the purchase price of the home. This kept buyer's costs low as the agency commissions were simply part of the overall purchase price, and did not need to be paid before the home purchase was concluded.
Not every transaction involves a buyers agent; some buyers negotiate the price and other terms confidently on their own, and other times, buyers unknowingly simply rely on the listing agent to present details included in a purchase contract. But, on transactions where the buyer's have signed an agency agreement with a person or firm to represent them in purchase negotiations, property inspections, financing decisions and settlement details, the agent legally represents them. The fee is then paid at settlement, via the pre-established " co-op" commission. Many in government and in the consumer protection industry feel that buyers were not always aware of their agent's compensation and many thought it was " free" and this lead to the outcome that is now in front of all buyers of homes; the idea that the buyer should pay for buyer agent services, directly, rather than indirectly through the sale price. The PROBLEM IS that, paying directly adds to out of pocket costs, which is generally the largest impediment to home ownership and the future gains in wealth from owning rather than renting. The NAR agreement still allows the buyer's agent to be paid via settlement, but only if buyers have specifically hired their agent, requested the commision payment, and included those details in their purchase offer.
So, the question looms; Do all buyers, and for that matter, all sellers need an agent? The answer lies in the details, and each property is different, and each buyer's knowledge of property as well as building techniques, inspection issues, financing, title and other parts of purchase transaction. For generations, buyers have purchased homes, land and business properties without an agent involved. But, the whole concept of real estate agency involved so that buyers who work in other fields, could use the expertise of experienced property professionals to get the best possible terms when purchasing a home. The system of buyer agency did not rise to being a legal distinction until the 1990's in most parts of the US. Various state laws then established that buyers must sign agreements with their agents to clarify the loyalty of the agent to the buyer, as opposed to the seller, who generally paid them. Buyer Agency has since evolved and now a separation of the fees is being established by the recent court decisions and the US Dept of Commerce. A buyer of any property should consider the main areas of transactions where expertise is needed. First and foremost is the ability to negotiate. Some people are simply more attuned to negotiating and others prefer to minimize conflicts and simply take or leave specific terms. This comes into play not only on purchase price, but also on property inspection items, financing terms, title insurance and other settlement services, as well as issues of timing of the transaction, which can all affect how an offer is presented, received and ultimately accepted by a seller. A buyer should consider each issue when considering whether to hire an agent. In the same way a consumer must decide whether to hire a CPA for tax filings and other complex accounting issues, or hiring an attorney to begin negotiations on legal matters, each consumer must decide for themselves. No one can unilaterally state that a buyer's agent is needed for every home purchase; it boils down to the complexity of the property and the proposed transaction, and the consumer's own expertise and experience relating to property issues. As for listing and selling properties, home sellers should be informed of how buyer's agents are paid and how advertising and marketing of their property will proceed if and when they hire a listing agent to help them sell their property with timing, price and other terms which are acceptable to them. Consumers should have a working knowledge of compensation and agency in general when making decisions on what services they will benefit from, and which agents in their market might work best with them to achieve the desired results. Stay tuned as buyer agency rules, in particular, may continue to change in the years ahead.