A couple of weeks ago (right before our weekly deadline) news broke that the National Association of Realtors settled to end litigation brought against it by home sellers regarding broker commissions. I will be discussing the facts of the settlement thus far, acknowledging that the courts have not approved the settlement and no changes will be made until at least July. I will be saving my opinion for a later article, perhaps after the July ruling, or perhaps if we continue to get readers reaching out.
So, what is changing? Based on what we know now, a couple of changes will be made.
As a licensed broker and member of the Central Oregon Association of Realtors, I have access to the Multiple Listing Service where brokers list homes that they have an agreement with the seller to list. In these listings, brokers provide all kinds of information, including public-facing information (number of bedrooms, lot size, school district, pictures, etc…) basically the information that goes to third-party sites like Zillow. There is also private information that does not leave the MLS, like if the home is vacant, how to access, best showing hours, certain seller preferences as well as what the listing broker will be compensating the buyer’s broker for bringing a qualified buyer to complete the transaction. So now maybe in July or sometime in the future, listing agents will no longer be advertising the compensation for a buyer’s broker. So now, since the compensation is not listed, it must be discussed and put in writing or negotiated through the purchase contract. This is the big change on the list side we have been made aware of; the next change has to do with the specific “buyer agent” and how that relationship will work going forward.
On the buyer’s side, in July or sometime in the future, agents will be required to enter into a contract with a client looking to buy prior to showing a single property. This agreement will outline the length or term of the agreement, as well as what the agent will be charging to successfully guide a client through the purchase of a property. Unfortunately, we really don’t have anything concrete to share as the “legal eagles” sort this out. There has been a lot of speculation as to what this will look like exactly moving forward; will sellers continue to compensate cooperating brokers? Will buyers pay out of pocket for the services of a buyer’s agent? Will lenders have products to cover commissions or fees for buyers’ agents?
So far that is about all we know that could change or be altered in the coming months, and to our loyal readers, I will try and dig deeper once more facts are fleshed out and we have a better understanding of what exactly is going to change.
I would like to pose a few questions to our readers:
What do you think of the two changes outlined in this article? Is this good for buyers and sellers? Does this seem to favor sellers? How does this help buyers? Let me know what you think, and we can do follow-up articles or a mailbag, whichever seems more appropriate. Thanks!
This article appears in Source Weekly April 4, 2024.
MAKE LOCAL JOURNALISM HAPPEN
Republish our articles for free, online or in print, under a Creative Commons license.
I think what’s most interesting is that it will eliminate the standard 6 percent commission on home sales. Although there will likely be local agents who all agree to hold the historic commission rates, there will be those that are more willing to negotiate. And those agents in the end will be more busy. And yes, I understand the rate was never set/concrete, but I’ve also never met anyone who had went through the home buying/selling process that was able to successfully negotiate to reduce that rate.
So is the change to possibly include the buyer interesting? Yes, and it will unfortunately eliminate some people from the market. But I think the most impactful will be the rate we’ve all understood to be a non negotiable suddenly on the table.
I have sold 2 of my 5 homes myself, rather easily, as both were in highly desirable locations just outside DC, in Falls Church, VA and the other in a highly desirable area of Mobile, AL. Just had to print colorful flyers, put balloons on my mailbox and advertise 2 weekends of open houses in the local paper. Being in desirable areas affords this. Likewise, my home here in Bend is in a highly desirable area. The few homes on my street that have been marketed have sold in short periods of time – one w/in 2 weeks – of being on the market. I would NEVER pay a real estate agent anywhere near 6% for the amount of work they would need to do to sell my home here. The fact that this fee may become negotiable is a good thing. Further, I have never agreed that real estate agent fees should be tied to the price of the home. That is why I sold 2 of my homes myself. I do not believe that there is a huge difference in the work that has to be put in to sell a $1 million home vs. a $350,000 home. Why would anyone willingly pay an agent $60K+ for selling their $1 million+ house in a very short period of time? That would amount to roughly $10K/hour based on maybe 6 hours of actual work, if the house sold quicklyw/in weeks, not months. I think all agent fees – whether sellers or buyers – should be negotiated with the individual client, based on the real amount of work each has to expend to sell/buy a home.