(CNN) 鈥� On Saturday, governing how most real estate professionals do business in the U.S. officially take effect 鈥� and the changes could potentially upend how Americans buy and sell homes.
The rules were agreed to by the National Association of Realtors, the powerful trade association that counts 1.5 million members, as part of a $418 million settlement into antitrust claims. The rules are designed to transform the way Realtors get paid and who pays them. It鈥檚 the largest change to the organization鈥檚 rules in at least a generation.
In a statement, Kevin Sears, NAR鈥檚 president, said that the changes 鈥渉elp to further empower consumers with clarity and choice when buying and selling a home.鈥�
鈥淚 am confident in our members鈥� abilities to prepare for and embrace this evolution of our industry and help to guide consumers in the new landscape,鈥� he said.
Here鈥檚 what you need to know:
Two key changes
Historically, buyers were not expected to pay their real estate broker directly. That鈥檚 because Realtor commission fees 鈥� to both the buyers鈥� agent and the sellers鈥� agent 鈥斅爓ere paid by a home seller.
Commissions usually total , so for a $450K home, roughly the average price of a home in the U.S., a seller would be responsible for $27,000 in fees. Many experts have said these commissions have been , inflating home prices.
But beginning this week, seller鈥檚 agents will no longer be allowed to advertise commission fees to buyers鈥� agents on multiple listing services that Realtors use to list and find homes for sale and to facilitate transactions.
That means that a buyer鈥檚 agent can no longer use the database to search for houses based on how much they鈥檒l get paid, a practice called 鈥渟teering,鈥� which led some agents to skip over showing homes that fit their client鈥檚 criteria solely because a seller was offering below-market commission rates, critics allege.
鈥淏y not having commission on the MLS anymore, it makes it harder to steer, because you can鈥檛 just do a search for 3% commissions,鈥� said Tonya Monestier, a professor of law at the University at Buffalo School of Law. 鈥淵ou can still call everyone up and figure out what the lay of the land is, but this just makes it much harder.鈥�
The second change affects the relationship between prospective homebuyers and their real estate agents. Buyers must now sign a legally binding representation agreement with their agent before they can begin touring homes together.
These agreements are designed to inform homebuyers how their agent gets paid,颅 and if sellers do not agree to pay the agent鈥檚 commission, the buyer may be . They鈥檙e also designed to inform buyers that this commission is fully negotiable.
鈥淭he idea is if buyers are aware that they can negotiate commissions and that if they, in fact, do pay them, not the seller, it might create a more competitive market and possibly a menu of services in the future that would be more comparable to other developed countries,鈥� said Norm Miller, professor emeritus of real estate at the University of San Diego.
A key element to these agreements is that a buyer鈥檚 agent cannot receive more compensation than what the buyer initially signed onto, even if a seller is willing to offer more.
On its , NAR said that these two changes have 鈥渆liminated any theoretical steering, because a broker will not make more compensation by steering a buyer to a particular listing because it has a 鈥榟igher鈥� offer of compensation.鈥�
The final approval hearing is scheduled for Nov. 26, but a judge聽聽of NAR鈥檚 settlement in April.
Buyer beware
Some brokerages have realized that buyers about signing anything that commits them to a legally binding relationship with an agent before they begin touring homes. So, they created shorter-term contracts that cover a week颅 or maybe even an hour for buyers to get comfortable with an agent before committing.
But, Monestier cautioned that buyers should be careful about signing any kind of legally binding contract without giving it a thorough read.
鈥淵ou鈥檙e going to see all sorts of different versions of these agreements that are going to vary, state-by-state, brokerage-to-brokerage. There may end up being thousands of them out there,鈥� she said. 鈥淚t concerns me that buyers and sellers may sign something blindly and then be surprised when things are not as they think.鈥�
Leo Pareja, the CEO of eXp Realty, one of America鈥檚 largest brokerages, told CNN that he drafted his company鈥檚 buyers鈥� agreements with simplicity in mind to head off potential confusion.
鈥淚t is designed to be something that a consumer could read in the driveway of a house without feeling put in an uncomfortable situation,鈥� Pareja said. 鈥淵ou don鈥檛 need a law degree to read it.鈥�
Pareja decided to make his contracts widely available so that they could be used by other firms, as well.
鈥淲e just want consumers and agents to have the least amount of friction going forward, because that鈥檚 the last thing we need right now,鈥� he said.
How this may affect home affordability
Some real estate professionals have warned that the new rules could have a chilling effect on the homebuying market since more buyers may now be expected to come up with cash to pay their own agents.
But Monestier said that she believed in the long-term, the changes would help consumers.
鈥淚 would say the better thing for homebuyers and sellers is if commission rates were to go down over time,鈥� she said.
It remains unclear whether the cost of buying and selling homes in the U.S. will immediately become cheaper for most people, though.
鈥淚 suspect somebody out there will eventually say, 鈥榣et鈥檚 compete on price.鈥� If it鈥檚 a big firm, that could cause a revolution,鈥� the University of San Diego鈥檚 Miller said. 鈥淏ut when would that happen? I don鈥檛 know.鈥�
In the short-term, Miller believes mortgage rates will have a larger impact on home affordability than any particular rule change.
The rate for an average 30-year fixed mortgage , still elevated compared to recent history but near the lowest levels in more than a year.
鈥淭hat has a whole lot more effect on affordability than anything we鈥檙e talking about here,鈥� said Miller. 鈥淚f mortgage rates come down further, rule changes will just be noise in the equation, compared to that.鈥�
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