Home buying just got a shakeup following this year’s settlement with the National Association of Realtors, giving sellers a lot more negotiating power.
As of Saturday, realtors are now barred from offering compensation on multiple listing services, making it more difficult for the agents of buyers and sellers to negotiate fees on their own despite having done so for decades.
The new regulations and rules are meant to give home buyers and sellers more transparency on what they are going to owe when closing on the sale or purchase of a home.
So here’s what’s getting shaken up.
Traditionally, home sellers have been forced to pay commissions in the range of 5% to 6% to their agents, which is then split with the buyer’s agent after the sale is made.
But now, the new rules leave more room for sellers to negotiate those fees down, in turn, making it more appealing for buyers to forgo having an agent entirely.
Now that the MLS isn’t serving as a forum for negotiation, much is still up in the air about how buyers, sellers, and agents will choose to cover commission costs.
Sellers could create more advantageous buying opportunities for buyers by lowering their home price and, in effect, the commission, or they could ask buyers to cover some or all of the costs.
To help buyers know the compensation that they would be responsible for, the NAR has also implemented a change that will require agents to enter into written agreements with buyers before showing a home.
The $418 million March settlement with the NAR has now added a new wrinkle to an already cooling housing market that has been hit with low supply, high prices, and high mortgage rates for more than a year.
Still, experts shared with Redfin earlier this month that the biggest takeaway from the new rules is that fees could continue to decline as commissions for buyers’ agents have already been sliding.
“It’s also possible that news of the settlement made consumers more aware they can offer any commission to a buyer’s agent or none at all, contributing to the decline since March,” the report from the real estate site said.