A compromise between real estate agents is already changing the way some Americans buy and sell homes

(CNN) — The seismic deal announced by the National Association of Realtors earlier this month hasn’t been approved yet, but it’s already sending shockwaves through the real estate industry.

The mere prospect of a future deal has already prompted some Americans to change their behavior when buying and selling their homes. Some potential home buyers said they plan to resume their search after the new rules take effect in the hope of finding lower prices, while some sellers are not waiting for the new rules to take effect in July so as to They may be able to reduce commission prices, or even eliminate them. Offers to Buyer Agents.

Housing experts say the $418 million deal would effectively dismantle the existing real estate business model, in which home sellers pay both their agent and their buyer’s agent, leading to what critics call inflated prices.

If approved by the judge, the deal would come with new rules for real estate agents.

“This is uncharted territory,” Debra Dobbs, a real estate agent in Chicago, said of the potential new rules.

Potentially lower cost of purchasing a home

Experts say the new rules could help bring down home prices.

That’s the hope of Jeremy Cannon, a 34-year-old teacher from Corona, California.

Last year, Cannon and his wife tried to buy their first home and submitted offers on several properties.

“All of our offers were rejected because other people were outbidding us,” Cannon said. “We were already trying to get bids above the asking price for almost every spot.”

At that time, Canon decided to take a break from his dream of ownership. However, new rules established by the NAR agreement could potentially eliminate what he considered an insurmountable obstacle: the high cost of housing.

The sales commission, traditionally shared between the buyer’s agent and the agent who markets the home, typically ranges from 5% to 6% of the home’s sales price. According to Census data, the median home price in the United States is $417,000, which means the average seller could be paying more than $25,000 in brokerage fees.

Vendor groups filed suit against NAR over this practice, alleging it violates antitrust laws.

Under the terms of the proposed agreement, selling agents will no longer be required to share their commissions with buying agents, delinking commissions from home prices and opening the door to a more competitive housing market.

Many experts believe that commission costs are factored into home listing prices. Lower commissions could mean lower home prices.

“I think it could be helpful,” Cannon said. “I expect it to be cheaper and house prices will go down further.”

Now he plans to resume his search for a home this summer.

The price drop will be a much-needed relief for Cannon and others looking to buy a home: The average sales price of a new home has increased 21% since January 2020, according to Census data.

Under the new rules, agents will also be required to enter into a written agreement with their buyers. Many agents plan to bet that if the home seller does not agree to pay their commission, the buyer will have to pay that money.

But Cannon said that if buying a home becomes more affordable, he would be willing to pay out of pocket for an agent, as long as it is “someone who has my best interests in mind.”

ahead of some new rules

Matt Hanley, 49, who works in insurance in Minnesota, has lived in his home since 2007. He became familiar with how real estate transactions work when he recently purchased a new home.

“We were confused,” he said. “I thought, ‘Wow, I’m surprised the seller has to pay my agent’s commission.’ “It seemed like a conflict of interest.”

Hanley now plans to put his home on the market in April. However, after the NAR deal was announced, they changed their stance: instead of offering to pay the commission to be split between their agent and their prospective buyers’ agent, they offered to split the commission from their agent as a buyer agent commission. Asked to write “%-negotiable”. On your home listing page.

Hanley said, “Why wait to reach a deal? It’s now public knowledge.” “I’m going to try to get myself to the beginning of this bell curve.”

However, Hanley’s use may be premature. The new rules would prevent agent compensation from being included on centralized listing portals, which some critics say leads agents to offer clients more expensive properties. But right now, buyers’ agents will still find that Hanley is not offering them compensation, which could discourage them from showing their homes to clients.

But Hanley points to the favorable conditions, saying he believes buyers may still consider buying your home, even if they have to pay their real estate agent out of pocket.

“We have everything going for us. There’s no inventory in our area and we’re selling at peak times, so we said, ‘Let’s try it,'” he said. “If someone really wants it, they’ll pay their buyers’ fees.”

“They should inform their agents, we should inform our agents,” he said.

“It will take more than a simple sentence”

Maria Letdin, an associate professor of business at Florida State University, said the agreement helped raise awareness that people have the right to negotiate. Still, Letdin said the status quo is likely to remain.

“It’s up to consumers, both the sell side and the buy side, to bring it into widespread use,” he said. “I think it’s going to take more than just a decision. I think it’s going to take consumers standing up for themselves and not being passive.”

“They now have a legally protected voice and they should use it if we want change to happen,” Letdin said.