How major real estate changes could impact homebuyers

For decades, the standard for paying buyer and seller agents in real estate transactions has been between 5-6% of the home’s sale price, split between the two agents. This summer, that structure could change as a result of the National Association of Realtors’ recent settlement, which could see buyers and sellers become more responsible for paying their own agents rather than making the sellers cover both fees.

One real estate professional believes this is good for the marketplace, making it more transparent.

“[The] NAR agreeing to cut our commissions and sellers can’t offer a buyer agent co-broke is not true,” said RJ Long, the managing partner for Coldwell Banker Prime Properties. “[Neither] NAR nor the [multiple listing services] set commissions. Our local boards do not set commissions. Therefore, they don’t have the authority to cut the commissions, the brokers do; we have that right.”

According to Long, there isn’t a fixed percentage.

“We never got to a 6%; it’s one of the biggest misconceptions in the industry right now is that we are so fixed,” he said.

As part of a settlement announced Friday, the NAR agreed to make some policy changes in order to resolve multiple class-action lawsuits brought on behalf of home sellers across the US

The trade group agreed to change its rules so that brokers who list a home for sale on any of the databases affiliated with the NAR are no longer allowed to include offers of compensation for a buyer’s agent.

This change is meant to address a central assertion in lawsuits brought against the NAR and several major real estate brokerages: that homeowners are being forced to pay artificially inflated agent commissions when they sell their homes.

The trade group also agreed to require agents, or others working with a homebuyer, to enter into a written agreement with them. That is meant to ensure homebuyers know what their agent will charge them for their services.

If the court signs off on the settlement, the NAR would implement the rule changes in mid-July.

Long believes the takeaway from this settlement should be different considering what it means for multiple listing services (MLS).

“NAR’s settlement rule changes could favor the highly professional and networked agents,” Long said. “Because one, they didn’t agree to cut commissions. They agreed to have the MLS no longer share them. So the buyer co-broke compensation is something that brokers can still offer. Brokers will still offer it. It’s just you can’t put it into the multiple listing services that are affiliated with NAR.”

Long says because of a low bar to enter the field, there is a rise in agents across the country.

“There is a realtor out there, a real estate agent out there, I should say, that is not informed dealing with a consumer who is not informed,” he said. “That’s what scares me.”

With multiple listing services not sharing commissions, more qualified, well-trained agents could stand out from the rest of the pack.

“There will be more transparency to value being offered,” said Long. “So again, companies who offer value, it’s going to be a little bit harder to ignore. Are you actually offering value to us or not? Just because there are two buyer agents does not mean they’re the same.”

At the end of the day, Long believes this is a positive for everyone, especially those looking to buy a home.

“They will have clearer representation,” he said. “They will have more clear transparency as to how the representation is being compensated, not just from a fiduciary duty standpoint, but from a compensation standpoint as well.”