Pasadena Realtor Adam Bray-Ali [Courtesy photo]
“Our listing agreements include four core requirements,” explained Adam Bray-Ali, a realtor based in Pasadena.
1) Listing price to advertise the house for sale
2) Compensation to the broker
3) Time periods for the agreement
4) Specifications of duties and requirements on all parties
A compensation schedule for the work and an agreement to pay a portion of that compensation to a brokerage firm representing the buyer of the property has long been a part of the contract and local practices and norms in Pasadena generally included a listing broker sharing half of the total commission with a broker representing the buyer, Bray-Ali said.
In California, the standard contract provided by the California Association of Realtors (CAR), the breakdown of the total commission and any ‘co-broker’ payments is highlighted but the settlements, crafted by the National Association of Realtors is making that a requirement across the country. Sellers often paid a fixed percentage commission to the both brokers involved in the sale, but now the expectation is that there will no longer be a promise that a seller will pay a commission to incentivize a buyer’s agent/broker to bring a buyer to the property.
Bray-Ali said that sellers are no longer required to offer a commission to the buyer’s agent under Multiple Listing Service (MLS) rules.
For many years in Pasadena, he said, the requirement was at least $1 in order to create a binding agreement of cooperation and compensation between real estate brokerages. This change allows for independent negotiation on each side of the transaction, potentially reducing overall commission costs.
A new listing agreement form created by the California Association of Realtors is expected in July 2024 and highlights the changes.
Bray-Ali said the largest impact of the new rules as a result of the settlements is that all buyers will be required to agree to a compensation agreement with a broker in advance of any discussions about representation. The rules dictate a similar type of agreement for buyers as signed by sellers, including time frames, compensation, and duties expected from all parties.
When considering whether to work with a realtor, Bray-Ali advises homeowners to ask key questions about the agent’s experience, marketing plans, and potential red flags specific to their property.
“Asking smart questions, how long have I been in business? Do I have any demonstrated experience with this type of work? What issues and opportunities do you see at my property” are some he suggested.
While working with a realtor is not mandatory, it can be beneficial for navigating the legal aspects and paperwork involved in a real estate transaction, realtors say.
Despite the uncertainties, Bray-Ali emphasizes the advantages of the current real estate market.
“We live in the greatest country in the world to own real estate,” he stated, highlighting the liquidity and well-defined legal system that facilitate property transfers.
However, he also acknowledged the impact of higher interest rates over the past 18 months has led to less speculation and potentially lower home prices in many areas.
The passage in Pasadena of local Measure H, the “rent control” initiative, has resulted in a new set of laws governing rental property that is causing a notable change in the rental housing market.
Navigating these changes, Bray-Ali believes, will require homeowners to carefully consider their individual needs and whether working with a realtor best serves their interests.
“I think a realistic homeowner will understand what’s best for them and that there’s no right answer for everybody,” Bray-Ali said.
