03/19/2024
I'm sure by now many of you have heard about the National Association of Realtors settlement. Let me break down exactly what that means for you, because there are a lot of sensationalized and straight-up misleading headlines being passed around right now.
First of all, commissions have ALWAYS been negotiable, so the headlines saying "farewell to the 6% commissions" are creating a false narrative that those commission numbers were written in stone. Were there agents who set their fee at 6%? Yes. Were there agents who offered to provide services for less? Yes. Will that change with this new settlement? No. As independent contractors, REALTORS are allowed to set their own fee. If a client doesn't want to pay that fee, they are free to find an agent who doesn't charge as much.
The biggest change I see in this settlement and the new rules that come with it, is that a listing agent no longer has to offer buyer's agent compensation to list a home on the MLS. That is a direct contradiction to the old rule- if you were going to list it for sale in the MLS, you had to offer SOMETHING to the buyer's agent. Yes, I've seen homes listed that offered a buyer's agent $1. Did the buyer's agent likely work for just $1? No. The buyers will have made up the difference between the $1 offered, and the fee the buyer's agent charges for their services.
In the coming months, if you want buyer representation to purchase a home, you will enter into an agreement that has been around FOREVER, called a Buyer/Broker Agreement. This is where the agent and buyer discuss the fee that the agent collects for their service and they agree that the buyer will make up the difference between what the seller is willing to offer a buyer's agent, and what the buyer's agent fee is.
THERE WILL STILL BE MANY SELLERS WHO WANT TO OFFER TO HELP PAY THE BUYER'S AGENT FEE TO ATTRACT THE MOST BUYERS!
What does this mean for buyers? Well, right now, almost every home in the MLS is offering to cover at least a good portion of the buyer's agent fee. However, when these rules go into effect in July, either you are going to need to have more cash upfront to purchase a home to cover down payment, closing costs, AND your agent's fee, or you will need to instruct your agent to stick with homes that are offering to help offset their fee, essentially shrinking the pool of homes to choose from.
What does it mean for sellers? It means you now have a decision to make- do you save yourself a nominal amount of money by declining to offer a buyer's agent fee, effectively shrinking the number of buyers who want to see your home, causing your home to take longer to sell, which often times means it will sell for less than if you had a ton of interest up front? There will be sellers who are willing to cut off the buyer's agent to spite their bottom line, but I think many will see the benefit in attracting as many buyers as possible in order to sell their home for the most money.
Whether you're buying or selling, or both, as long as you're working with an agent that brings value and can help you sell for more or negotiate a great deal as a buyer, they will more than pay for themselves in the long run.
As always, I'm here to chat if you have any questions about how you're going to achieve your real estate goals!
New rules could start saving home buyers and sellers thousands of dollars in lower commissions as soon as this summer, but experts say it will take the market some time to digest the changes.
