The National Association of Realtors Settlement

Last Friday night, CNN published an article with the headline, “The 6% commission on buying and selling a home is gone after Realtors association agrees on a seismic settlement.” I think this is an overreaction and not a true understanding of the settlement. After reading many articles about this settlement, here are my key takeaways:

How It Will Impact Buying and Selling a Home

The new rule prohibits offers of brokers’ compensation on the MLS. However, offers of compensation can still be made off the MLS and will be expected. Sellers can still compensate the buyer’s agent and/or pay the buyer closing costs. There may be more negotiation on the fees, but don’t expect them to go away. Realtors have to do a lot of work to market and get a house ready for sale and then negotiate the terms of the sale.

Buyer’s Agent Agreement

National Association of Realtors (NAR) members must enter into a buyer’s agent agreement. That is already being done consistently in our area. This is (in my opinion) the most significant question to be answered. Where do the buyside commissions eventually settle? There is a wide range of views regarding the buyer’s agent’s value, ranging from a good deal of value, particularly for first-time home buyers, to some consumers who feel they can find a house and negotiate a contract themselves with some minor help. I highly regard the work of a buyer’s agent, but it will be up to the market to work this out.

How Will This Affect Home Prices

Who will benefit? Some experts think that this will drive down the cost of selling a home and, therefore, the price of houses could fall. Other experts feel that this will not happen because work is being done in a real estate transaction, and someone will need to pay for it. I think that it will have less impact than many people think.

The settlement does not take effect until July and still needs to be approved by the courts. So, there is still a lot of time to see how this will change residential real estate transactions.

Buying or Selling a Home?

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