An hour before the open house on Saturday afternoon, a real estate agent paced the dark bamboo floor, straightening the bedspread, fluffing the pillows and lighting a scented candle.
The last-minute touches on the $1.2 million condo in Jersey City, New Jersey, were exactly what realtors have been doing at open houses for decades before this weekend.
The difference now is what information they must disclose and where they can disclose it when it comes to real estate commissions – a fee that has ranged between five and six percent of the sales price and was previously typically paid by the seller and split between the seller's agent and the buyer's agent.
The changes, which went into effect this weekend, decouple the two commissions: Sellers will no longer be expected to pay the buyer's commission, although they can still choose to do so, and the proposed commission split can no longer be advertised in the online database commonly used to sell homes, the MLS.
The new rules went into effect across the United States as part of a $418 million settlement with the National Association of Realtors, a powerful real estate trade group that was successfully sued by a group of Missouri homeowners who argued that a longstanding practice of requiring them to pay brokers' commissions led to excessive fees. Brokerage firms have spent months informing agents and consumers of the impending changes.
But when the measures came into force nationwide this Saturday, shoppers remained confused.
The first prospective buyers to walk through the door of the three-bedroom apartment in Jersey City—a commuter suburb of Manhattan where three-bedrooms are hard to come by—were a couple in their 30s. They admired the floor-to-ceiling windows and inquired about the building warranty, common areas and the types of mortgages they should apply for.
But potential buyers asked themselves a new question: Do they have to pay the sales commission?
“Definitely confusing,” said 33-year-old Sarthak Jain. “I'm trying to understand it better, but basically I'm coming to the conclusion that it's going to cost us more.”
In fact, no one seems to know exactly who will win and who will lose from the new rules on paying real estate commissions.
“The challenge is that the interpretation varies greatly from state to state, broker to broker and agent to agent,” says Tristan Ahumada, a California-based broker and real estate industry influencer who runs a Facebook group for real estate agents with over 165,000 members.
Buyers are now expected to sign an agreement with their agent before viewing, with the exception of open houses when people can still just walk in off the street.
Aditi Maheshwari, Mr Jain’s wife, held a stack of papers in her hand – her unsigned purchase agreement.
“But I think we can still negotiate,” she told her husband, doubting his claim that the new changes would mean a higher price for her.
Jill Biggs, who heads the Jill Biggs Group, a Coldwell Banker team of over 60 agents, and represents the seller of the Jersey City condo, has advised her agents to continue offering the buyer's agent compensation of 2.5 percent of the seller's final sale price to attract more clients. The buyer's agent must now email or text her office to get the information; previously, the property would have been listed on the MLS.
A new sign was prominently displayed in the condo's kitchen: “Attention, Potential Buyers: Please Read This Sign Carefully.” Below were some of the changes.
The signage is one of many variations the rule change is bringing across the country: In New Jersey, a law went into effect this month requiring open houses to have signs clearly stating that the agent hosting the open house represents the seller of the home.
The New Jersey Association of Real Estate Agents has also set up a hotline to train agents.
“To be honest, a lot of agents haven't been paying attention or aren't aware of it at all, so it's like ripping off a Band-Aid,” Ms Biggs said.
At open houses elsewhere, agents and potential buyers struggled to cope with the changes.
At a Tudor-style home in the Weequahic neighborhood of Newark, New Jersey, visitors walked through a stately, ornate wooden door and were led to a piano in the living room to inspect and sign the newly required buyer's agreement.
Agent Debra Marshall of Keller Williams Elite Realtors predicted that some buyers would struggle to pay costs previously covered by the seller. But her recent clients who are sellers have opted to cover the buyer's agent commission, she said.
In the Washington, D.C., area, Joe Okon of Century 21 New Millennium has five active listings, and four have decided to take the buyer's commission. But one of the sellers didn't want to pay the commission, so a potential buyer's agent decided not to show the property, Mr. Okon said.
This is an unintended side effect of the rule change, which some experts warn could harm first-time buyers in particular.
“I estimate that a large percentage of buyers have no idea what is going on,” Mr. Okon said at the open house he hosted for a three-bedroom duplex house with Carrara marble.
And a few miles away, in Washington's Shaw neighborhood, Errick Harrell, a Redfin agent, explained the new rules at an open house for a two-bedroom condo decorated with pop art.
Among those attending the open house were Angela and Mike Mucha, who said they had heard about the agreement but did not know too much about it.
The couple listened carefully before concluding: “I definitely need to learn more,” said Ms. Mucha, 55.