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Who's going to protect our commissions now?

By
Real Estate Broker/Owner with Condoideas Realty Group

Eliminating or even negotiating 6% commissions on real estate transactions could introduce a challenging scenario for home buyers, warns an economist.
Expressing skepticism about the recent settlement, the economist hopes the presiding judge will dismiss it.

A significant transformation looms over the housing market following a groundbreaking settlement by the nation's largest real estate association. This impending change is poised to revolutionize the process of buying and selling homes. However, I think that the proposed alteration could swiftly burden buyers with additional expenses.

The settlement, announced by the National Association of Realtors and slated for mid-July implementation pending approval, mandates that listings on the NAR-operated multiple-listing service no longer disclose the commissions buyers' agents would receive on a sale. Essentially, buyers' agents would not receive upfront compensation.

Although real estate agent fees are negotiable, they typically range from 4% to 6% of a home's sale price, varying based on local market practices. Traditionally, home sellers cover these commissions, which are usually divided between the buyer's and seller's agents, with buyers not directly paying their agent.

This settlement is viewed favorably by home sellers, as they will no longer be compelled to offer commissions to buyer's agents, potentially saving thousands of dollars. However, who's going to pay the buyer's agent?

Under the new rules, while sellers could still opt to pay a buyer's agent separately, many may choose not to do so, leaving buyers responsible for their agent's fees. For instance, for an $800,000 condo at the Yacht Club at Portofino, a 3% commission to a buyer's agent would translate to an additional $24,000 in expenses for the buyer, on top of down payments and closing costs. Who's the buyer who's going to accept paying on top of the house his realtor? I personally imagine that buyers will search online, find their dream house and contact directly the selling agent in order to avoid paying realtor's commissions.

Though commissions remain negotiable, offering lower fees could prolong the house-hunting process for buyers. Additionally, written agreements specifying service costs with agents would become mandatory under the proposed settlement, raising concerns about potential conflicts of interest.

 

Comments(2)

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Matt Kombrink
One Source Realty - Geneva, IL
Your #1 Source For Real Estate

Daniela, your blog post offers a thought-provoking perspective on the potential impact of the recent NAR settlement on real estate commissions. You've raised a valid point about the challenges buyers might face, especially with the shift in who pays the agent's fees. The example of the $800,000 condo at the Yacht Club at Portofino illustrates just how significant these additional expenses could be for buyers, highlighting a crucial aspect of the settlement that might not be immediately apparent.

 

Your insight into the likelihood of buyers avoiding agent fees by directly contacting selling agents is an interesting prediction, and it could indeed reshape the traditional dynamics of real estate transactions. This situation also underscores the importance of negotiations in real estate and how these changes could alter the way buyers and sellers approach these discussions.

 

The concern about written agreements and potential conflicts of interest adds another layer to this complex issue. Your post certainly opens up a dialogue about the future of real estate transactions and the role of agents in this evolving landscape. Thank you for sharing your expertise and analysis on this critical topic.

Mar 28, 2024 03:11 PM
Daniela Pellicciotti

Thank you Matt for such a great analysis and response.  In Italy the buyer and the seller pay their realtors and how it translated is that real estate agents only care about having listings and do not care at all for representing a buyer. If a buyer comes into their real estate office wanting to buy something they do not represent then they do not care about the buyer since searching with other real estate companies means less commission so a waste of time. Not sure it will translate in the same here in the USA but it could certainly become the same.

Mar 29, 2024 07:50 AM
GilbertRealtor BillSalvatore
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Enjoyed your blog page, and I added you as a follower. I would love the follow back. Also, then we both get 50 points. Bill

Bill Salvatore, Realtor- Arizona Elite Properties

Mar 29, 2024 05:55 AM