LOUISVILLE, Ky. — New home buying rules are kicking in across the country, affecting real estate agents, brokers and buyers. 

What You Need To Know

  • New home buying rules go into effect nationwide Saturday, Aug. 17 

  • Agents and buyers must sign a contract before touring a home together

  • Sellers don't have to advertise with a blanket fee for buyer's agent

  • Real estate agents face fines for showing homes without a contract 

The charges were ushered in after a National Association of Realtors settlement involving brokerage commissions. Louisville adopted the new rules ahead of the national rollout.

“This is a great home," said Louisville-based realtor Jordan Knotts as he showed off a newly listed, four-bedroom property in the city's Buechel neighborhood. "It features over 2,400 square feet." 

Within hours of the listing going live, Knotts booked five showings for Aug. 16.

“I’m sure it’s going to be gone by the end of this weekend,” Knotts said.

Before any of those tours happen, Knotts must have a signed agreement with any potential buyer. That’s one of the new rules agreed to in the landmark settlement. Agents and buyers must sign a detailed representation agreement establishing agent compensation prior to touring a property.

“You absolutely, 100%, have to have some type of buyer's agency form filled out before you step foot in the property,” Knotts said.

Agents face stiff penalties if these contracts aren’t signed, including $2,000 for a single infraction, Knotts said. If the buyer is unaware of the new rules, Knotts said it’s incumbent upon agents to educate shoppers.

This agreement can be for a single showing, a specific length of time or until a home is purchased. Potential buyers have flexibility in the matter, and above all, it requires clear communication with agents.

In addition, sellers no longer have to include a blanket offer of compensation for a buyer’s agent when listing a home. Knotts said that likely means more discussion among parties involved.

“There's going to be a lot more communication with the buyer’s agent and the listing agent if the seller is offering a commission," Knotts said. "What that commission may be … there’s probably going to be some form of broker-to-broker compensation agreement in place separate from the contract that both parties, the seller and both brokers sign."

“(Multiple Listing Service) provided the transparency in the past on what we were going to get paid. Now, there is going to be a lot more communication between both sides, which is really a good thing because real estate is all about communication." 

The new rules may mean more paperwork, but Knotts said it should add more transparency to the home buying process and better protect those in the market.

Knotts added Louisville has added more home inventory in the last six months because mortgage rates have ticked down from generational highs.

"For the longest time, we were hovering somewhere between 1,000 and 2,000 listings on the MLS; just the other day, we were over 2,400," he said. "This is the highest inventory has been in years." 

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