Changes to realtor commissions taking effect this weekend could give home sellers a lot more negotiating power — and for buyers, potentially some more paperwork.
Starting Saturday, realtors will be barred from offering compensation on multiple listing services (MLS), making it harder for buyers’ agents and sellers’ agents to negotiate fees on their own, as they’ve done for decades.
Until now, home sellers traditionally had to pay commissions, commonly in the range of 5% to 6%, to their agents, who then split that fee with the buyer’s agent upon making a sale. The new rules, which follow a historic $418 million settlement with the National Association of Realtors in March, leave more room for sellers to negotiate those fees down and make it more appealing for buyers to forgo agents entirely.
“It’s the biggest change probably in the history of real estate,” said Mike McCann, a realtor in Philadelphia. “It has created a lot of fear, a lot of anxiety” within the industry, he said.
With the MLS no longer serving as a forum for negotiation, it remains to be seen how agents, buyers and sellers will choose to cover commission costs. While sellers could pass on any savings on the commission to the buyer in the form of a lower home price, it’s also possible that sellers could increasingly choose to ask the buyer to cover some or even all of the costs.
Here is the why:
“The settlement that triggered the shake-up stemmed from a class-action antitrust lawsuit that alleged brokers were steering clients to listings on the MLS offering better commissions.”
Percentage based commissions is such a weird standard for pay. As if there is something inherit in the sale of any and every $275k home that merits $1,250 more in compensation than would be owed for a $250k home.
When there’s more people who want to buy homes than there are homes for sale, the power dynamic is still in favor of the sellers. Sounds like this could potentially favor more experienced buyers/hedge funds over first-time home buyers. If sellers don’t want to cover fees for buyer’s agent, then that’s more a first time buyer would have to pay upfront.
This is all about shady buyers realtors aiming their customers at homes that have higher commissions instead of what’s the best fit for their customer.
I build multiple listing services for a living. It’s been fun watching all of the different parties involved freak out about this change.
I’ve been removing commission fields from APIs and removing constraints from databases for weeks
Wow. You get to remove code? I’d assume you just default it to 0 so the API contract doesn’t change and break 20-year-old code.
It has created a lot of fear, a lot of anxiety” within the industry.
Good. It’s the biggest parasitic job in the world…
Bullshit. A good realtor is worth their weight in gold. Buying a house is one of, if not the most expensive purchase anyone will make, and a good realtor will help a buyer not only find the right place, but help them navigate the process and potentially save them the hazard of overpaying for what could be a money pit dump. Sure there are unscrupulous realtors out there, but there are plenty good ones too.
You’re describing a home inspector. I’ve never had a realtor assess the condition of a house. It’s not their job. Plus, even with the best realtor, having an intermediary during negotiations only ever makes the process more complicated. If you have a home inspector and a good lawyer you can easily do rest yourself with no real risks. Both of them charge fixed fees for their services too and I wouldn’t buy a house without both anyways. Realtors are 100% superfluous.
I’ve had both experiences, with the last one being a fantastic agent who sold our home for top dollar and also pitched in to help us paint our kitchen a color that would sell. I agree, some are parasites but some are great and worth the value they’re asking for. Sounds like every business honestly.
You could have paid an interior designer a couple hundred dollars for a home visit and better advice. Nothing your realtor did was worth a 5%-6% cut.
It’s a good thing we paid them less. They also made up double what we paid for it in 1 day so, yeah, still think they were worth it.
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That’s fair.
You meant to say “car salesman” or “insurance adjuster”.
For like 75% of all home purchases, screw realtors. They’re fairly useless for what they charge, and any inspectors they recommend are bullshit inspections you wouldn’t want to trust.
I bought my house 15 years ago and did it without any realtors involved. Both parties saved thousands in exchange for doing like an hours worth of paperwork.
If it’s a simple straight up purchase of a home that you’re able to go look at first, skip the realtors. Get your own inspection done after negotiating price without going through a middlemen that try to keep the buyer and seller from speaking to each other, and if you aren’t comfortable doing up the paperwork, have a lawyer do it for less than a grand.
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Information for NBC News:
MBFC: Left-Center - Credibility: High - Factual Reporting: High - United States of America
Wikipedia about this source… requiring agents to enter into written agreements with buyers before showing a home.
Yeah, not liking that bit. I get it’s probably a CYA but I’m not signing anything to be shown a house I probably won’t like.
