As a prominent real estate agency, we find ourselves navigating the forefront of a transformative period in the industry. The recent elimination of the long-standing 6% commission standard for home purchases in the US represents a seismic change in established practices. This monumental shift, triggered by an antitrust lawsuit settlement of $418 million reached by the National Association of Realtors (NAR), carries profound implications for how US real estate agents engage in business and cater to their clientele.
Changes
Upon court approval, the initial shift in the operational framework of US real estate will mandate the compulsory implementation of buyer agency agreements. Under the revised system established through the National Association of Realtors' settlement, listing agents will no longer prescribe the payment amount for the buyer's agent when listing a property. Instead, this remuneration will be subject to individual negotiation between the buyer and their agent.
The second significant change revolves around how commissions are typically handled. Traditionally, it's been the seller's responsibility to cover the commission for both their own agent and the buyer's agent. But if the settlement goes through, the buyer will now assume responsibility for compensating their respective agent.
Thirdly, through the settlement, NAR agreed to remove all sections within the multiple listing service (MLS) that disclose broker compensation. Additionally, there will be a prohibition on mandating agents to subscribe to MLSs as a prerequisite for offering or receiving compensation for their services.
Conclusion
These transformative measures are poised to usher in a significant reduction in the costs associated with selling homes in the US. With commission rates no longer set in stone, real estate agents will likely face heightened pressure to adjust their fees as they compete for clients' business.
Economists project that commissions could plummet between 25 and 50 percent, thereby exerting downward pressure on home prices throughout the market. This anticipated decline in transaction costs is anticipated to not only benefit consumers but also stimulate increased activity in the housing market, fostering greater affordability and accessibility for prospective buyers. The National Association of Realtors said that these changes will go into effect in mid-July 2024, pending court approval.
Originally published 19th April 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
