| I still can’t believe it….. |
| There have been so many recent changes in the real estate world, it’s hard to keep up…even if you’re an agent!! Commission has always been complicated for most to understand, and in my opinion, it’s about to get even worse. Here’s a somewhat condensed version of what you need to know: Background: Traditionally, sellers have paid for the commission when their home is sold. The percentage that they pay ranges and is always negotiable. In our area we usually see that the average is 5% but that can be higher or lower. Typically, the commission was then usually split between the sellers agent and the buyers agent who brought a buyer to the table. Recent Lawsuits: In 2023 there were multiple lawsuits challenging how real estate commissions were structured. The sellers pushed back and questioned why they should be paying for a buyers representation when they are being represented by their own agent. Their claim was that they were being forced to pay artificially inflated agent commissions when they were selling their homes. They blamed the NAR (National Association of Realtors) for this by claiming that real estate industry practices kept agent commissions artificially high. Changes: NAR offered a nationwide settlement with $418 million in damages and a promise to make some changes which came in affect in literally YESTERDAY. What are they? 🔑 First, commissions will no longer be advertised on Multiple Listing Services (MLS). While sellers can still offer to pay a buyer’s agent’s commission, that information must be privately offered rather than on the MLS or familiar sites such as Realtor.com and Zillow. The amount of the buyer’s agent commission will be negotiated between the buyer and their agent rather than with the seller. 🔑 Second, buyers must sign a written buyer agency contract with their agent that clearly spells out how much the buyer’s agent will be paid for their services. Buyer agency agreements are already mandatory in 18 states. 🔑 One likely impact is greater transparency about commissions. Buyer’s agents will be forced to discuss their payment options with buyers in greater detail than many have shared in the past. Ok sooooooo what does all this really mean?? |
| Real World Example: You’re looking to purchase your first home. You’ve been saying up enough money to be able to put 3.5% down and are comfortable with a purchase price of $425,000, which means you need $14,875 to put down. You’ve been looking for over a year and have toured 25 homes and made offers on 2 of them but lost out due to multiple offer situations. You love your agent, you trust them, and you’re so grateful they’ve guided you through the process thus far. You see a listing pop up on Zilllow and text your agent about it immediately. The house checks all the boxes and is exactly what you’ve been looking for! Your agent calls you back only to let you know that the seller of the home isn’t willing to pay for the buyers compensation on this transaction. Instead, you as the buyer will have to compensate your agent for their time on top of the down payment costs you’ve been saving towards for years. What’s the impact? Since buyers may need to pay their agent out-of-pocket, I think these changes will significantly impact affordability in a climate where it’s already so difficult to purchase. Sellers may lower their prices slightly since they wouldn’t need to cover the buyer’s agent’s commission. The biggest change? Many agents will be asking their buyers to sign buyers agreements. Buyers may negotiate with their agents to pay a commission based on a percentage of the sales price, a flat fee for all services, individual fees for specific services or an hourly rate. The scariest change? Buyers may skip having an agent represent them all together, and they’ll go directly to the sellers agent. My two cents: Like anything, we learn to adapt. I think it will create more corruption and confusion in an industry that most don’t understand as it is. It will make the barrier to entry into the housing market even more difficult, and create an even larger divide between those who already own real estate and those who don’t. If you’re looking for an agent to represent you who cares about YOU… please don’t hesitate to call or text me. 508-863-1015 “My goal is to help you reach yours” |
