August 15, 2024
Big change are coming to the real estate market and what you pay your realtor this weekend!
So if you are planning on selling your home or if you are in the market to buy a home, anytime soon you need to pay attention to this video.
Starting this Saturday August 17th, we are going to start seeing a massive shift in the way we pay commissions to the real estate agents who represent us. This change is going to give buyers and sellers a lot more choices than they’ve had in decades. And there are up sides and down sides to that for both buyers and sellers.
Before I tell you all about those choices, I want to thank my subscribers for voting for this story as the bonus this week if you want to vote too make sure you subscribe to my page during my next live event or you can follow these steps and you can subscribe right now.
Ok – back to your choices. I mentioned up sides and downsides. On the up side some say this may drive down the overall cost of buying a home– but on the downside some say it’ll just shift the cost burden from sellers to buyers – and it could simply drive some real estate agents out of business especially if they aren’t competitive enough.
For decades, listing agents – the agents who help sellers sell their homes — have effectively set the commission paid to a buyer’s agent on the MLS — the multiple listing service — which is a service that lists homes for sale in local areas. When the commission is listed on the MLS — buyers’ and sellers’ agents know up front what they’ll get paid on any given house and usually agree to split that commission. Commissions in the United States are typically between 5-6% of the home sale price. And that full commission tab is generally picked up by the seller to the tune of about $100 billion in commissions every year nationwide.
Well – the National Association of Realtors has always maintained that commissions are “fully negotiable,” but last year a jury found otherwise. They said the NAR through that MLS structure was artificially keeping agent commissions high and driving up housing costs. Back in march the NAR settled. That settlement includes not only a $418 million fine but also included these changes to the way real estate agent commissions are structured.
For sellers — you will still have to sign a contract with your agent and you will still be paying for your own agent but you won’t automatically be picking up the full tab for five or 6% commission anymore. Your listing agents can still offer a commission to the buyer’s agent, but it is not required.
The big change are coming for buyers. This is where the sticker shock may come in. Since the seller may not be picking up the cost of your agent anymore–you may have to pick up the tab yourself. Which could be tens of thousands of dollars in costs you were not expecting. The new rules also require agents to enter into a written agreement with buyers over what commission they buyer will pay the agent from the beginning. So, in the past buyers – especially first time home buyers – would be able to call an agent in their area and ask them to show homes. That happened because the agent knew from the home seller how much commission they would receive if you purchased that home. But now – before the agent opens a single door for you – you will be presented with an representation agreement from that agent about how much you will pay them. It may be a flat fee, a commission based on the purchase price of the home or another method. And if the seller of the home you want doesn’t jump in to help pay that fee or commission– then you’ll be on the hook for that amount.
This new structure applies to the 1.5 million members of the National Association of Realtors.
