The biggest purchase that most normal folks make is a home. For a very long time, everyone has been following the same rules about commissions and costs for buyers and sellers. But that apple cart has been more than upset recently - it’s been tossed completely over, and all them apples are rolling all over the place!
Here are Five Fast Facts about big changes to realtor commissions:
- 🤼 The Legal Body Slam - Last October, a jury in Kansas City, MO delivered a verdict that the National Association of Realtors (and two brokerages) was conspiring to keep commissions artificially high and slapped them with a $1.8 billion fine. NAR agreed to make major changes as a part of the settlement.
- 🤔 Past And Future - For a long time, home buyers typically didn’t pay their agent; that commission usually came out of the cost of the sale itself, meaning the seller paid for both agents, or the cost was blended into the mortgage itself over a long period of time. Starting this summer, sellers can reject that arrangement, and buyers will have the right to select their agent, dictate what services they are willing to pay for, and even skip out on an agent altogether. Though the phrase “buyer beware” does seem to fit here…
- 🚫 Say It Ain’t So - The reasoning behind the old way was that many buyers couldn’t afford to pay an agent out of pocket, even though they really needed an agent’s help (especially first time buyers). Given the prices of housing, they still might not be able to afford an agent…but that’s a different issue.
- 👍 Oh Yeah, Baby - The change will mean both buyers and sellers will save money, or at least have the opportunity to if they are savvy comparison shoppers and negotiators. Realtors aren’t big fans, though, obviously.
- ⏳ The Timeline - The changes will kick in starting in July of this year. It may not be a huge impact right away, but it seems very likely that it won’t be long before saving tens of thousands of dollars on artificially high commissions become a very potent incentive.
🔥Bottom line: This could be a very good thing for home buyers and sellers, allowing them to choose the level of involvement they want from their agent, and potentially saving thousands of dollars on the biggest purchase they’ll make. Realtors, on the other hand, aren’t very happy about it. The industry may lose a lot of people who can’t adjust to the new reality.
Do you know anyone in real estate? What do they think about this change?
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