The National Association of Realtors recently announced a seismic settlement that, if approved, could potentially change the real estate industry. The settlement, worth $418 million, has already caused some Americans to adjust their behavior when buying or selling homes. Some prospective homebuyers are planning to restart their housing search after the new rules take effect in hopes of finding lower home prices, while some homesellers are already lowering or eliminating the commission they offer to buyers’ agents. Housing experts believe that the settlement will disrupt the current real estate business model, as sellers will no longer be required to share commission with buyers’ agents.
The potential new rules as part of the settlement could help lower home prices, according to experts. For individuals like Jeremy Cannon, a teacher in California, this could be a significant relief as he was previously unable to afford a home due to high bidding wars and costs. The traditional real estate commission structure, where both the seller’s agent and buyer’s agent are paid, typically amounts to 5-6% of a home’s selling price. Groups of sellers previously filed lawsuits against the NAR claiming that this was a violation of antitrust laws. With the new rules, sellers’ agents will no longer be required to share commissions, potentially leading to a more competitive housing market and lower home prices.
Buyers like Jeremy Cannon are hopeful that the new rules will make owning a home more affordable. Cannon plans to restart his home search in the summer, hoping for a price drop following the settlement. The new rules require agents to have written agreements with buyers, and many agents plan to stipulate that buyers would be responsible for their commission if the seller does not agree to pay it. Individuals like Cannon may be willing to pay for an agent out-of-pocket if it means obtaining a more affordable home.
Matt Hanley, an insurance worker from Minnesota, had recent experience with real estate transactions when purchasing a new home. He was surprised by the commission structure and plans to list his home with a 0% buyers’ agent commission following the NAR settlement announcement. Hanley believes that this change will benefit him in a seller’s market and is eager to be an early adopter of the new rules. However, the new rules may impact his ability to attract buyers’ agents through centralized listing portals, as agents will no longer be able to see the compensation offered upfront.
Mariya Letdin, a professor of business at Florida State University, believes that the settlement has raised awareness about negotiating rights for consumers in real estate transactions. She acknowledges that maintaining the status quo may still be possible unless consumers actively advocate for themselves. Letdin emphasizes the importance of consumers using their legally protected voice to push for change in the industry. Overall, the potential impact of the NAR settlement on the real estate market remains uncertain, but it has already spurred changes in behavior and attitudes among buyers and sellers in the industry.
