Considering Buying Your First Home This Year?
- Laura Donovan
- May 1, 2024
- 2 min read
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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