Real estate agents across Colorado are concerned that new rules going into effect this week could drastically change the way the industry operates.

One local agent, Michelle Klippert, who owns The Real Estate Store, is concerned the new rules could result in a tougher working relationship between agents and homebuyers, if agents aren’t up-to-date on the rules.

The new rules come about as part of a $418 million settlement the National Association of Realtors (NAR) reached with home sellers, who claimed the organization was conspiring to inflate commissions and force sellers to compensate buyer agents.

NAR, as a result, has updated its policy handbook in multiple areas, two of which are being talked about extensively as possibly presenting challenges in real estate.

One change has to do with MLSs or multiple listing services.

Currently, MLSs include a field that specifies whether and how much a seller is willing to compensate a buyer agent. That field will be removed from MLSs.

The other deals with definitions of services and cooperation when referring to an agent-buyer relationship.

On one hand, the changes could be good. The lawsuit was brought about as sellers believed buyers’ agents were keeping their own commission on homes artificially high, and listing the fee ahead of time, on the listing itself, meant it was difficult to negotiate a lower fee.

The new rules, in theory, would bring the price on those fees down or mean no fee at all to the buyer’s agent, making the price more affordable.

Klippert said that has always been the case — that fees were fixed into the price of the home, and they were negotiable.

But the new rules, she said, could actually result in more work and risk for the agent.

With one of the new rules, agents have to enter into a contract with a potential buyer before they can begin a working relationship.

Klippert said a working relationship can mean anything from doing the paperwork to complete the purchase of a home, or it could mean something as small as showing a home.

That means, just to do a home showing, a potential buyer is required to enter into a contract with a real estate agent, and vice-versa.

And with the fee rule, buyer agents don’t know if a seller is willing to cooperate with their own fee.

Klippert said that means a lot of paperwork could end up being filled out before the buyer or the buyer agent knows what the other side of the deal is thinking. That could mean the home purchaser could end up owing the buying agent money without the seller willing to offset any of that fee.

“For the uneducated or for the new buyer, they may feel like they’re forced to work with the first person sitting in front of them,” Klippert said. “And they may end up owing them thousands of dollars.”

These contracts have always been part of the process in Colorado, according to Klippert, but currently, as the rules are currently in place until Aug. 17, when those contracts were signed was negotiable.

Now, contracts have to be signed pretty much up front.

“I think it’s going to slow down the market,” Klippert said. “Because I’m going to send buyers out to get pre-qualified before the buyer even signs me.”

She said greener real estate agents might not do that, and they could end up getting stuck in a relationship with a buyer they don’t want to work with.

Klippert said these buyer-agent contracts can be for as short or as long as each side wants, but that both the buyer and agent should be cautious about signing anything with these new rules in place.

She said everyone needs to be careful of not signing long-term deals, but she said there will almost certainly be people doing just that — whether for predatory reasons, or just out of ignorance.

Klippert said these new rules will likely challenge first-time homebuyers more than people with money.

If sellers are less willing to pay an agent’s fee, first-time homebuyers are less likely to be able to afford representation out of their own pockets than wealthier people.

Justin Tubbs is the Montrose Business Times editor. He can be reached by email at justin@montrosebusinesstimes.com or by phone at 970-765-0915 or mobile at 254-246-2260.