Buying and selling homes is about to get interesting and a lot more affordable. Beginning this summer, no longer will buyers and sellers split the standard 6 percent commission. Instead, agent commissions will be negotiable allowing buyers and sellers to shop for the best deal. Finder’s fees, where the seller’s agent rewards the buyer’s agent for a lead, won’t be allowed. Basically, the cost of buying a home should drop dramatically. Instead of paying a $27,000 commission on a $450,000 home, the commission may be between $4500 and $9000, which is the typical 1%-2% commission paid to realtors in other countries.
These historic changes came about following the settlement of a multibillion dollar antitrust lawsuit filed against the National Association of Realtors (NAR) in March of 2019. Last November, a federal jury found the NAR and two brokerages liable for $1.8 billion in damages for conspiring to keep agent commissions high. The case was recently settled, and the NAR will pay $418 million to a group of homeowners and agree to abide by new rules and guidelines.
Although most of the new rules are positive, there are a few negatives. Buyers may not be allowed to finance their agent’s commission and will need to pay cash for their service. They’ll also have to sign an exclusive deal before working with a broker. Many real estate agents and brokers will leave the industry. Those who are successful will remain and likely increase business but may decrease their marketing budgets. As a sign of things to come, stocks are already down for companies like Zillow and Redfin. It will be a few months before the changes take effect and the impact of the NAR settlement on the real estate industry remains to be seen.