How will the new real estate agreement impact me if I want to buy or sell a home in the US?

I want to sell my house. Do I still have to pay commission?

Yes. But once the changes go into effect, you won’t have to pay any commission to the buyer’s agent, as is the case in some MLS systems.

Commissions are still negotiable, as they have been since the U.S. Supreme Court ended NAR rate-setting in 1950, and that negotiation may be more important than ever.

As a seller, you can still follow the typical standard commission structure, which typically splits the cost equally between the buyer’s and seller’s brokers, if you choose. The generally accepted standard has been 6%, but in many places the typical percentage is lower.

But with the new rules, you don’t have to use that structure; You can negotiate on various options.

Additionally, the agreement completely prohibits disclosing commissions in the MLS. This is to prevent agents from focusing only on properties where they will take home a big paycheck instead of the homes that really matter to their clients.

NAR has long said that having sellers also pay the buyer’s agent makes it cheaper in terms of upfront costs and more economical for home buyers to hire an agent.

If you consider paying a 6% commission a cost of doing business and viewing homes and you want to market your home by offering to pay the buyer’s agent’s commission – as is common now – then you can continue to do so. Can keep. Or you can offer a total of 3% with a small split between the two.

However, that information may no longer appear on the MLS and must be reported separately to buyers’ brokers and agents.

How will the market change?

Although everyone is still trying to figure out how things will work from now on, the changes could transform the real estate business, changing the way transactions work and reducing costs.

Glenn Kelman, CEO of brokerage firm Redfin, said in a statement, “Even though the letter of the agreement allows for collaboration, the way the agreement is perceived affects agents’ perspective about collaboration and consumers’ perspective about fees.” “Can change.” “The result may be that cooperation between agents on fees weakens, but does not disappear.”

Kelman wrote that he believed the deal would reduce commissions.

“When it’s the consumer who hires the agent who pays that agent, they’re more careful about commissions,” he said.

Although there are many low-cost models, such as flat-rate agents or discount agents, these generally do not have a large market share.

Buyers and sellers may prefer the traditional way of doing business. But for those who are looking for alternatives, new options should emerge.

A recent study by the Federal Reserve Bank of Richmond found that using a cost-based commission model – in which buyers’ agents only make money per home shown, not a percentage of the sale – could cost consumers $30 billion a year. There can be savings of more than Rs. ,

The researchers concluded that commission limits would help lower prices for home buyers and sellers, but that minimum commission limits would also be required. Supporting the sale of low-value homes.

The new rules also raise questions about how they will affect first-time buyers and low-income people.

Although the changes may reduce commissions for real estate agents, some of them welcome the new rules.

“This is the best news for professional real estate agents,” said Michael Downer, a broker with Naples-based Coldwell Banker Realty. “It will be difficult for those who have a license in name only and who do not understand how to demonstrate their value to buyers or sellers to stay in business.”

He predicts the market will swing toward two extremes: low-cost, low-service agents and high-cost, high-service providers.

“I don’t think there’s going to be a middle ground,” he says. “There will be people who offer almost no value, who put it on the MLS and that’s it. And people who provide limousine services. .The general public doesn’t see the value in a buyer’s agent right now.”