In OneLaw’s February newsletter, Attorney Chiara LaPlume explains how working with a real estate agent may be changing due to recent litigation.

Read the full February 2024 newsletter HERE.

The text version is below.

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As we experience the depth of winter, there is hope that spring is fast approaching.

That means the residential real estate market will start to heat up. Our real estate expert Attorney Chiara LaPlume will present a seminar about “Buying and Selling A Home” in our office building at 55 Chapel Street in Newton next Thursday, February 8, 2024 at 12:00 PM. Come hear her speak about fundamentals of the process and recent developments to consider.

Attorney LaPlume also explains in this newsletter how working with a real estate agent may be changing due to recent litigation.

With the new year, OneLaw welcomes another addition to our practice, Beth Herr. Attorney Herr specializes in family law, and represents clients at OneLaw in guardianships, child welfare, adoption, and uncontested domestic relations matters. Welcome, Beth!

As always, OneLaw is dedicated to serving the personal legal needs of families and individuals across a variety of practice areas. Let us know how we can help you. Visit our website (https://www.one-law.us) or give us a call at 617-831-4355.

Peter A. Hahn, Esq.

Founder & Owner of OneLaw

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Welcome Beth Herr to OneLaw!

Attorney Herr represents clients in guardianships, child welfare, adoption, and uncontested family law matters. She graduated from Northeastern University Law School and is a visiting professor at Holy Cross.

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Attorney Chiara LaPlume discusses “Buying and Selling a Home”

Thursday, February 8, 2024 12:00 PM

55 Chapel Street, Newton

Attorney LaPlume will discuss typical aspects of the process of buying and selling real estate, the state of the market, the role of real estate agents and attorneys in the process, and recent developments to consider in residential real estate practice.

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How Working With A Real Estate Agent May Be Changing

by Chiara LaPlume, Esq.

Did you see the headline in November 2023 about a Missouri court issuing a verdict on antitrust litigation regarding real estate agents? If you are buying or selling in Massachusetts it might affect you. While the lawsuit was filed in a Missouri court, it was against many real estate companies with nationwide offices, and the plaintiffs claimed antitrust violations that are based in federal law. Given the $1.8 billion verdict and the related lawsuits already in process, similar lawsuits are expected to be filed in other states. Even before other suits are filed or heard, this significant award has already started to affect “best practices,” and is expected to eventually make way for a new standard way of doing business for real estate agents everywhere – Massachusetts included.

What Is the Basic Upshot of the Lawsuit?

The court agreed that real estate business practices by real estate agents in Missouri were anti-competitive by (i) inflating real estate commissions at around 6%, and (ii) forcing the seller to pay the buyer’s agent’s commission, effectively burdening the seller with the costs of services that benefit another party and that may moreover work against the seller’s interest. The lawsuits so far have expanded to the NAR (National Association of Realtors) and MLS (Multiple Listing Service), but this article will only focus on the main impacts on real estate agent compensation, and how that is expected to impact consumers.

What Does This Mean if I’m Selling?

If you plan to sell in 2024, you can expect updated listing agreement forms (Fall 2023 or 2024 editions) being presented, although this may not always be the case. You can expect to have an explicit conversation involving (i) who the listing agent that you hire can and cannot represent, for example if they can also represent a buyer they already know on your sale transaction, and (ii) whether the seller should offer to pay a buyer’s agent’s commission or not. Prices are driven by demand after all, and many buyers are already covering a lot of costs (e.g., inspections, down payment, mortgage application fees, appraisals, closing costs, and legal fees), and may be unwilling to come out of pocket to pay their real estate agent as well. A discussion about the marketing strategy will therefore include whether to incentivize buyers by offering a commission split, as much as staging.

What Does This Mean if I’m Buying?

The first item that you might notice is a request to sign a buyer’s agent’s agreement. Last year, you might not have been asked to sign an agreement with a buyer’s agent. Things were informal. When you scheduled a viewing, you would sign a disclosure outside the property just before seeing it, stating that you understood that the agent you were working with was showing you this one property as a buyer’s agent, representing only you (or alternatively, stating that they were also representing the seller, or only representing the seller). If you did not like working with your buyer’s agent, you just started to work with another agent for your next viewing. Formalities might have been minimal. Now, if an agent introduces you to a property and you buy, they need to clarify who will pay their commission if the listing agent does not offer a commission split. Therefore, they need to have a conversation with you, and an agreement about the payment for their services. This might happen before you are even scheduled to see a property. A buyer’s real estate agent can provide a lot of value to the transaction, including saving you time by understanding what you like and need (and only showing you the properties that fit the bill), assessing the value of a property and negotiating the price of a very costly item, steering you away from bad neighborhoods or problematic properties, providing recommendations and referrals as needed, anticipating problems and needs, and providing a sounding board if issues come up.

In Conclusion

Although this issue might not be explicitly brought up, expect real estate agents to disclose and negotiate the commission amounts more in 2024 than they did in 2023.

Attorney Chiara LaPlume represents clients in residential real estate matters, from purchase and sale agreements to advising condominium associations. She is also a title insurance agent.

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Contact us to discuss ESTATE PLANNING, whether for the first time or to update your plan!