Changes to realtor commissions taking effect this weekend will give home sellers more negotiating power and potentially an increase in paperwork for buyers. Realtors will no longer be able to offer compensation on multiple listing services (MLS), making it harder for agents to negotiate fees between themselves. Sellers traditionally paid commissions to their agents in the range of 5% to 6% with the buyer’s agent also receiving a portion upon sale. However, the new rules allow for more flexibility in negotiating fees, making it more appealing for buyers to bypass agents altogether.
The changes come amidst a cooling housing market, with high prices and mortgage rates causing a decline in existing home sales. Sellers may choose to pass on savings from reduced commissions by lowering home prices, or alternatively, ask buyers to cover some or all of the costs. The National Association of Realtors (NAR) is implementing a new requirement for agents to enter into written agreements with buyers before showing a home to ensure transparency in compensation.
The changes were triggered by a class-action antitrust lawsuit alleging brokers were steering clients to listings with better commissions. The NAR has denied wrongdoing and maintained its commitment to ensuring fairness in broker compensation. Despite concerns about potential increased costs for first-time homebuyers, experts predict that fees could decline further as consumers become more aware of their options in compensating agents.
Ultimately, the changes should provide more transparency for both buyers and sellers in how they compensate brokers, potentially leading to lower fees and more flexibility in negotiations.
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