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  • Writer's pictureLaura Donovan

Considering Buying Your First Home This Year?

For some first timers, the learning curve can be really steep. Add to this, a lawsuit against the National Association of Realtors on how much home buyers pay for the work of real estate agents.


How It Always Worked: 


  • Most home sellers and buyers are not real estate experts so they engage a realtor to help and represent them. Most are members of the National Association of Realtors. The home seller’s realtor helps determine a selling price, advises on needed improvements to get the best price, lists the property online, may host open houses and represents the seller in negotiating a final sale price. The buyer's realtor looks for homes that fit their budget and interests, provides advice on neighborhoods and home values, and negotiates a purchase agreement with them. 

  • Real estate agents are paid a commission (typically 5 - 6% of the purchase price of the home) and this was split between the seller’s agent and the buyer’s agent, and paid for by the seller at closing. 


What Triggered a Change:


  • In Missouri home buyers sued the National Association of Realtors arguing the automatic 6% commission violates antitrust rules and costs consumers billions.

  • They also argued home buyers should not be automatically required to pay the sellers realtor. 

  • The National Association of Realtors agreed to make changes to its rules and pay a $418 million dollar penalty. 


What home buying might look like in the future (if the agreement is approved this summer):


  • Home sellers and buyers will negotiate what they pay the realtors they engage. Realtors may have to compete for your business, and the standard 6% commission may disappear. 

  • For home buyers, this could mean having to pay an additional fee to their agent at closing, in addition to the downpayment and other closing costs. 

  • NY Times reporter Debra Kamin  covering the story wrote: Economists estimate that commissions could now be reduced by 30%, driving down home prices across the board…and could mirror the shake-up that occurred in the travel industry.  Does anyone remember going to meet with a travel agent? 


Buying a house is complicated and every buyer’s situation is unique. If you have additional questions that you’d like to discuss, please reach out directly.

Sources:


6597052RG_May26

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