National Association of Realtors

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Existing-Home Sales Inch Up But Prices Keep Soaring | Bankrate

August 28, 2024 No Comments

The Good Brigade/Getty Images; Illustration by Austin Courregé/Bankrate

Key takeaways

Existing-home sales in July 2024 rose 1.3 percent from the previous month, ending four straight months of declines, according to the National Association of Realtors.

The nationwide median sale price was $422,600, up 4.2 percent from last year and the highest July median on record.

Inventory in July continued to inch up, reaching a 4.0-month supply — a sign that buyers may be gaining more leverage in the market.

The housing market reversed course slightly in July 2024, showing a slight increase in sales for the first time in four months, a new report by the National Association of Realtors (NAR) shows. Sales of existing homes rose 1.3 percent from last month, which marks an end to four consecutive months of declines but is still 2.5 percent lower than one year ago. Meanwhile, the median home-sale price dropped slightly from June’s all-time high but still marked the highest median price on record for the month of July, according to NAR Chief Economist Lawrence Yun.

High mortgage rates have contributed to the sluggish sales figures. While rates have thankfully remained below the 8 percent mark briefly seen in October 2023, they are still hovering between 6.5 and 7 percent. The average rate on a 30-year fixed-rate loan was 6.62 percent as of August 21, according to Bankrate’s most recent survey of large lenders. Combined with the historically high prices, that means affordability challenges remain daunting for homebuyers.

The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates.
— Mark Hamrick, Bankrate Senior Economic Analyst

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”

Existing-home sales finally inch upward

The count of existing-home sales includes all completed resales, including single-family houses, condos, townhouses and co-ops. According to NAR, the number of sales nationally increased 1.3 percent month-over-month to an annual pace of 3.95 million transactions in July 2024. While that’s the first increase since Q1, it’s still a 2.5 percent decrease from last year.

“Despite the modest gain, home sales are still sluggish,” Yun said in a statement.

Regionally, the Northeast saw the biggest sales increase, up 4.3 percent from June and 2.1 percent from July of last year. In the West, sales rose 1.4 percent both month-over-month and year-over-year. Sales in the South rose 1.1 perent from June but were down 3.8 percent from last year, and in the Midwest sales were flat in July and down 5.2 percent from July of last year.

Days on market

Properties typically remained on the market for 24 days in July, up slightly from 22 days in June and 20 days in July of last year. Selling times are a crucial measure at any time of year, but especially during the peak spring and summer selling seasons.

Home prices hit new July record

The nationwide median sale price for existing homes in July clocked in at $422,600. That’s down slightly from June’s all-time high of $426,900, mostly due to seasonality, but it’s still an increase of 4.2 percent from last year and the highest July median on record. This month’s jump marks 13 consecutive months of year-over-year price increases.

All four geographic regions again experienced annual price increases in July. The West continued to have the highest median price by far at $629,500, up 3.4 percent from a year ago. In the Northeast, the median rose 8.3 percent from a year ago to $505,100. The South’s median price rose 2.3 percent to $372,500, and the Midwest’s median rose 4.5 percent to $321,300.

First-time homebuyers made up 29 percent of sales in July, no change from June but down slightly from 30 percent in July of last year. All-cash deals accounted for 27 percent of July sales, up slightly from 26 percent a year ago.

Housing inventory on the rise

The supply of homes for sale is inching higher, after being severely low for quite some time. Total housing inventory — the overall number of homes for sale on the market — stood at 1.33 million units at the end of July. That’s up a modest 0.8 percent from June but a significant 19.8 percent jump from a year ago. The figure represents 4.0-month supply, which is getting closer to the five-to-six months typically required for a healthy, balanced market.

Despite the sharp rise in mortgage rates this past fall, which has kept many homeowners from sellingand thus kept those homes off the market, things may be looking up for homebuyers. “Consumers are definitely seeing more choices, and affordability is improving due to lower interest rates,” Yun said.

Robert Frick, corporate economist with Navy Federal Credit Union, cautiously agreed: “This is a glimmer of hope, not a turnaround signal,” he said. “Home sales remain weak, but lower mortgage rates should bring more potential sellers off the sidelines and increase affordability somewhat.”

This article was originally published by a www.bankrate.com . Read the Original article here. .

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Maryland real estate agents, homebuyers navigate changes under new rules – Maryland Matters

August 27, 2024 No Comments

For more than a century, when someone wanted to buy a home all they had to do was walk into a real estate office and ask the agent to start showing them properties. That agent was typically paid by the seller if a deal ever went through.

All that changed Saturday.

As part of the settlement of an antitrust lawsuit brought by home sellers, the National Association of Realtors (NAR) agreed that sellers’ agents can no longer include an upfront offer of compensation to the buyer’s agent in order to list a property on the Multiple Listing Service.

As a result, buyers may find themselves having to strike a deal with their agents to pay them for work that used to be covered automatically by the seller, negotiating a price with their agent before even looking at a property.

It’s a change that agents said they have spent months preparing for. But that doesn’t mean they’re crazy about it.

“The buyer and the tenant are the ones at … risk of losing the most, due to the fact that they may not be able to obtain or afford proper representation,” said Gregory Gray, a real estate agent based in Howard County. “It tilts the scale in favor of the seller.”

But the change was defended by NAR President Kevin Sears, who said in a written statement last week that the changes “help to further empower consumers with clarity and choice when buying and selling a home.”

“As the August 17 practice change implementation date approaches, I am confident in our members’ abilities to prepare for and embrace this evolution of our industry,” his statement said.

The lawsuit against NAR claimed that its previous rules were anticompetitive. Under those rules, sellers had to include an offer of compensation for buyers’ agents if they wanted their home to show up in the MLS, the association’s listing of properties for sale.

Under the settlement announced in March, NAR now prohibits such offers in an MLS listing. While buyers and sellers could later negotiate some payment, it’s not set in advance, leaving buyers to pay their agents’ fee.

The shift could be less painful in Maryland, which has required written buyer agreements since 2016, said Maryland Association of Realtors CEO Chuck Kasky. But the new written agreements must disclose the amount or rate of compensation of a buyer agent, Kasky said in a resource video explaining the change.

“Real estate licensees will be required to enter into written agreements with buyers before touring a home. This applies to houses listed on a multiple listing service,” Kasky explained.

Judith Egbarin, the owner of Blue Ribbon Realty, said that under the new arrangement will hit buyers the hardest.

“They want the buyers to pay commission to their own agents, so who’s going to lose out the most?” Egbarin asked. She answered her own question by noting that “the buyer now has to come out of pocket even more.”

She said this will add to the fees that the buyer traditionally has to pay, like down payments and closing costs.

Jennifer Young, from Jennifer Young Realty, agreed with Egbarin. Young said the new settlement would most negatively affect first-time home buyers.

“I don’t think it’s a good thing. So I think it’s going to hurt buyers who are no-money-down, low-money-down buyers, first-time buyers, grant program buyers,” Young said. “So there’s potentially more cost to have proper representation.”

But none of the agents felt defeated by the settlement and, in fact, all were looking ahead. Young said her firm had been preparing its agents for months before Saturday’s shift and Gray said that the settlement will leave a competitive landscape for buyers’ agents.

“It’s going to be very competitive, and they’re going to have to show their value if they want to obtain the commission,” Gray said. “They’re not getting it from the seller or the landlord, they’re going to have to get it from their client, and they’re going to have to be able to negotiate.”

Egbarin said that real estate will just have to adapt and adjust.

“It’s just, we need to get used to it. And we will adjust,” she said. “I’m not frustrated yet, I am very optimistic, I want to see what happens.”

– This story was updated on Monday, Aug. 19, to correct Chuck Kasky’s title in the 10th paragraph and to clarify the effect of the NAR settlement throughout.

This article was originally published by a marylandmatters.org . Read the Original article here. .

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Sweeping changes have arrived for residential real estate in Colorado

August 26, 2024 No Comments

A landmark settlement in a lawsuit against the National Association of Realtors could transform how homes are bought and sold starting on Saturday, potentially lowering commission costs and providing greater transparency.

But it could also complicate home purchases for first-time buyers and shake up the real estate brokerage industry.

“This is an opportunity for us to adjust and adapt. In this day and age, so many people are seeking out transparency, and this change in practices gives us that,” said Natalie Davis, a Realtor with Keller Williams Realty Downtown in Denver.

Although buyers and sellers alike could always negotiate terms, including the commission rate, with their agents, industry practice settled into a pattern where sellers paid commission costs in the 5% to 6% range for both sides of a transaction.

Home sellers in Missouri sued to end the practice, which they argued wasn’t fair and had them paying more out of pocket than necessary. The National Association of Realtors settled the case in March for $418 million and agreed to change some of its long-standing practices effective Aug. 17.

One of the biggest changes regards the posting of what a seller would pay an agent bringing a buyer to the table on the multiple listing service or MLS, which local Realtor associations have historically owned.

Agents could see the cooperative compensation information, but consumers didn’t have easy access. So long as sellers were footing the bill, wrapping the commission costs into the sales price, which lenders would finance, it didn’t matter much.

“No longer can real estate brokers put their commissions on the MLS. But they can put that information on their own websites. That is what you are going to see more of. But that will be up to each individual brokerage,” said Tyrone Adams, CEO of the Colorado Association of Realtors.

Buyer agents can contact the listing agent directly to obtain that information when it isn’t publicly available, an added step, but not a huge one.

Separating the commission information from platforms owned by Realtors was meant to address allegations of collusion, while also providing sellers more flexibility in compensating buyer agents.

“Sellers will need to be aware that by not offering compensation, they may diminish the buyer pool. It is the buyer’s choice, not the Realtor’s choice,” said Kelly Moye, a Realtor based in Northglenn.

Steering, or the practice of agents avoiding listings that are less favorable to them, is still prohibited. But it isn’t against the law for buyers to set such conditions.

That is where the tug of war will happen. A buyer who doesn’t have the extra money to cover their agent’s commission may want to limit the listings they consider to only those where the seller has agreed to pay.

But the starter-home market is also where homes sell the fastest and with multiple offers.

Even when the seller is willing to pay a buyer’s agent, showing up with a commission request below the competition could save a seller money and push an offer to the top, said Holden Lewis, a home and mortgage expert with Nerd Wallet in a blog post.

By negotiating on the front end with their agent, buyers can improve their chances when it comes to securing a purchase.

Agents will want to get paid — either by the seller or the buyer — and contracts will state that. But if the buyer is strapped, which is often the case with first-time buyers, they should try to negotiate terms.

“The contract will state how much you will pay the agent representing you either in a flat fee or a percentage of the purchase price, both of which are open to negotiation. Other elements up for negotiation include duration of the contract and geographic area (one or more addresses, zip codes, cities, and counties) for the scope of your search,” Holden said.

The settlement requires buyer agent agreements, which Colorado has long required. Even standardized contracts leave room for negotiating. If an agent isn’t willing to budge or can’t seem to justify what they are asking for in compensation, consumers are encouraged to look elsewhere.

“As to the regular contract with a financial obligation to compensate the buyer agent, they should not sign this agreement unless they’ve read and understood it and it’s fair to them,” said Stephen Brobeck, a senior fellow at the Consumer Federation of America.

Buyers should request a copy of the agent contract and review it closely before signing, avoiding agents who don’t provide an advanced copy. Buyers should always weigh the services they will receive against the costs.

“We suggest they aim at the dollar equivalent of 2% or less of the sale price,” Brobeck said.

The average buy-side commission paid on a home purchased in Denver was 2.56% in July, down from 2.64% in January, according to a study from Seattle brokerage Redfin. Denver had the 18th highest commission of the 50 metro areas that Redfin examined.

Home tours a sticking point

Most listing agreements don’t allow a buyer to show up and tour a home on their own, aside from an open house. Part of that is to protect sellers, who typically leave when a showing is held and who don’t want strangers walking through their personal space unaccompanied.

The National Association of Realtors, as part of its proposed settlement, is requiring that brokers sign a “touring” or “showing” agreement before taking a potential buyer through a property. It isn’t a full-blown buyer-agent agreement, but will likely discuss compensation should the person touring decide to buy a home.

“The idea is to provide transparency to the buyer regarding compensation and where it will come from,” Moye said.

The Colorado Real Estate Commission, however, argues that showing agreements aren’t required by state law and are part of licensed brokerage duties, said Marcia Waters, director of the Colorado Division of Real Estate.

“That isn’t a consumer-friendly practice and if someone wants to see a property, they shouldn’t be forced to sign an agreement,” Waters said, adding the commission has told the Colorado Association of Realtors as much in a letter.

The Real Estate Commission provides many standardized forms the industry uses, but hasn’t created touring agreements and doesn’t plan to, Waters said.

“If brokers are using touring agreements, they have to hire a licensed Colorado attorney to draft those,” she warned.

A tougher time for first-timers

Current homeowners who are trading up will typically have enough equity in their homes to cover the cost of an agent. They are also less likely to need hand-holding and can take on more tasks themselves. More concern is focused on first-time buyers.

“First-time buyers are those who need the agent the most. They are also the least likely to be able to afford their buyer agent compensation,” said Lindsey Benton, broker/owner of Live.Laugh.Denver. Real Estate Group.

Downpayment and closing costs are already a burden for many first-time buyers and covering agent fees will add to the upfront expenses that lenders still haven’t figured out how to roll into a mortgage. First-time buyers are also the most vulnerable if they try to go it alone.

The changes could revive less common practices, such as transaction brokers, who behave as arbitrators for both sides rather than fiduciaries for one side or the other, or using an attorney to draft a legally binding contract or buyer self-representation.

New technology-focused alternatives are already arriving. On the same day the NAR changes took effect, San Francisco startup Shay, which describes itself as the “first self-representation” platform for homebuyers, launched.

The tagline on its homepage is: “Buy a home without a realtor. Save $1000s.”

“Paying a real estate agent a fixed percent of a home transaction is simply a bad deal for many homebuyers. We enable homebuyers to save money by doing it themselves. This is similar to how TurboTax gives tax filers an alternative to accountants or Expedia gives travelers an alternative to travel agents,” said Peter Jeffrey, the company’s CEO and founder in a news release.

The platform offers more than 20 guides to help buyers with each step of a transaction and claims its AI models can generate offers, assist with negotiations and review agreements.

Adams counters that purchasing a home is the most complex transaction most consumers will ever undertake and having a trained professional assisting comes with important benefits.

“People will have more conversations about these things and understand what it means for them. That isn’t a bad thing,” he said.

Originally Published: August 17, 2024 at 6:00 a.m.

This article was originally published by a www.denverpost.com . Read the Original article here. .

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Real Estate Agent Fees And Realtor Commissions | Bankrate

August 24, 2024 No Comments

In this do-it-yourself digital age, home sellers and buyers alike might wonder if they need Realtors — or, more precisely, to pay Realtor fees. Just how crucial are these agents to a successful real estate transaction?

Well, a good agent is really pretty useful. Especially if you’re buying a home: Agents have access to information you don’t, and it takes time and expertise to research properties, find the best ones for you and put together a strong offer. But sellers see many benefits, too, especially when figuring out the best asking price. Your home will still need to be staged, listed on the market and shown, too. Here, we’ll take an in-depth look at how real estate agent fees work and what you get for the money.

One important note first: Changes to the way commissions work went into effect on August 17, as a result of a long legal battle settled by the National Association of Realtors and several major brokerages. The commission system, and how it has changed, is outlined below.

The NAR lawsuit

In October 2023, a federal jury found that the National Association of Realtors (NAR), along with several large brokerages, conspired to inflate Realtors’ commissions. All of the brokerages settled out of court, and as of March 15, 2024, NAR did the same.

As a result, the longstanding traditional real estate commission model — that is, sellers footing the bill for both their own agent and their buyer’s, typically totaling 5 to 6 percent of the home’s sale price — is upended. Now, sellers’ agents may no longer make offers of compensation to buyers’ agents on the MLS (multiple listing service, a vast database of for-sale homes accessible only to industry pros). Home sellers might no longer need to pay the agent who represents their buyer, which could open the door to much more competition among buyer-side agents, and even more potential for fee negotiation.

How much are Realtor commissions?

Let’s recap the traditional commission model, before the rule changes took effect.

Only a very small portion of Realtors work on salary — working on commission is much more common. For years, the typical going rate was 6 percent, split down the middle between the buyer’s agent and seller’s agent. But it began to fluctuate with the advent of discount brokers and the rise of online, publicly accessible listings.

Of course, real estate commissions can be negotiated, and nowadays they typically run somewhere closer to 5 percent of a home’s sale price. That means the means the more expensive the home, the more money the agents make. The exact terms of an agent’s commission vary from sale to sale, and can depend on the region and which firm they work for.

Let’s look at an example. A 5 percent commission on a $250,000 home sale would come to $12,500. But on a $1M sale, a commission at the same rate would come to $50,000.

Assuming a 5 percent total commission under that model, here’s roughly what sellers could expect to pay based on the price their home sells for:

Home’s sale price
Seller’s agent commission (2.5%)
Buyer’s agent commission (2.5%)
Total commission (5%)

$250,000
$6,250
$6,250
$12,500

$500,000
$12,500
$12,500
$25,000

$750,000
$18,750
$18,750
$37,500

$1,000,000
$25,000
$25,000
$50,000

Seller vs. buyer commission

Sellers sign a listing agreement with a Realtor in which they agree to pay a commission fee after the transaction closes. If it’s an “exclusive right to sell” arrangement, they pay the fee even if they found the buyer on their own.

Commissions for both Realtors in the transaction have traditionally been paid by the home seller: Both the buying and selling agents are paid with proceeds from the sale of the home. These two agents typically split the total commission — so for a 6 percent commission, the selling agent would receive 3 percent and the buying agent would receive the other 3 percent. Now that the new rules have kicked in, that is changing.

It also changes in the case of dual agency, when one agent represents both the buyer and seller in a transaction. Laws about this vary by state; in some states, dual agency is not permitted. In this type of scenario, pay particular attention to the home appraisal to ensure you’re getting a fair price. While agents have a fiduciary duty to their clients, with dual agency, the lines can get blurred.

As Samantha Fish, an agent with Wesely & Associates in Grass Valley, California, points out, agents are still required to act in their clients’ best interest. “It’s in our ethics; it’s in our contract,” she says. “If someone comes into my open house and they like it, but they don’t have an agent, at that point I can say, ‘let me get you an agent from my office’ so they feel like they’re being represented 100 percent as well.” Still, buyers working directly with a listing agent may have more room for negotiation because the seller may agree to a lower selling price if the agent agrees to lower their fee.

The brokerage’s cut

Real estate brokerages may get a cut of the commission as well. The brokerage RE/MAX, for example, has a split commission setup by which its agents receive 95 percent of the full commission from the sale, and 5 percent goes back to the company.

“The broker has to set the policy and oversee, monitor and supervise everything the agent does,” says Patrick Duffy, broker/owner of Duffy Realty in Miami. “And if the agent does something fraudulent or unprofessional, the broker gets sued.”

What do real estate agent fees cover?

You might wonder, what services does this commission fee buy me? One of the biggest ways buyers benefit from working with a Realtor is gaining access to the MLS, the database Realtors use to see and list properties for sale.

The fee compensates the agent for time spent answering questions and helping you through the process. An agent is also able to utilize their skills and contacts to negotiate, find properties and take you on tours of multiple homes.

A Realtor’s fee covers a wide range of costs for sellers as well, including marketing materials, staging and showing the property, coordinating open houses and contacting agents of potential buyers. When an offer comes in, the listing agent negotiates on behalf of the seller, often presenting one or more counteroffers. A lot goes into listing a home, such as:

Creating a comparative market analysis to establish a competitive price
Arranging for photo shoots, sometimes including aerial shots via drone
Writing descriptive listing copy to attract interest from other Realtors and potential buyers
Providing staging guidance
Showing the property multiple times to prospective buyers
Hosting open houses, often on weekends
Providing yard signage
Making sure listings are populated on all major property search websites
Helping the seller review and negotiate buyer offers

As with most of the other expenses related to real estate transactions, a Realtor’s fee isn’t paid until the sale closes.

Average real estate commissions by state

Overall, the national average Realtor commission in 2023 was 5.49 percent, according to data from Clever. In all but a few states, the average commission ranged between 5 and 6 percent.

Keep in mind, though, that Realtors may accept a lower commission for high-priced homes to earn a higher amount overall: Their piece of the pie may be smaller, but it’s a richer slice. “For example, if I’m listing a $4 million home at 6 percent, that’s a lot of money,” Duffy says. “In a situation like that there is greater flexibility to negotiate the commission — if you get $100,000 or $80,000 instead of $120,000, it’s still a good payday.”

Here are the average real estate commissions by state, according to Clever:

State
Average commission rate

SOURCE: Clever

Alabama
5.45%

Alaska
6.00%

Arizona
5.44%

Arkansas
5.99%

California
5.11%

Colorado
5.62%

Connecticut
5.47%

Delaware
4.88%

District of Columbia
5.49%

Florida
5.37%

Georgia
5.81%

Hawaii
4.78%

Idaho
5.50%

Illinois
5.35%

Indiana
5.56%

Iowa
5.67%

Kansas
5.58%

Kentucky
6.00%

Louisiana
5.56%

Maine
5.17%

Maryland
5.34%

Massachusetts
5.45%

Michigan
5.92%

Minnesota
5.82%

Mississippi
6.07%

Missouri
5.58%

Montana
5.50%

Nebraska
5.25%

Nevada
5.80%

New Hampshire
5.25%

New Jersey
5.21%

New Mexico
5.90%

New York
5.39%

North Carolina
5.52%

North Dakota
5.00%

Ohio
5.99%

Oklahoma
5.95%

Oregon
5.03%

Pennsylvania
5.48%

Rhode Island
5.50%

South Carolina
5.62%

South Dakota
5.49%

Tennessee
5.58%

Texas
5.73%

Utah
4.90%

Vermont
5.49%

Virginia
5.45%

Washington
5.25%

West Virginia
6.67%

Wisconsin
5.15%

Wyoming
6.00%

How to avoid paying Realtor fees

Selling your home without the help of a real estate agent — called “for sale by owner” or FSBO for short — is certainly possible. Between July 2022 and June 2023, 7 percent of home sales were sold by owners without the help of an agent, according to NAR data. But selling without an agent’s help is a lot of work to do on your own, much of it complicated.

If you don’t want to go it alone, ask agents from the outset what their commission is and compare the terms of each person you talk to. If you think the fee is too high, talk to them about lowering it. If the transaction is being handled on both sides by agents from the same brokerage, you might have more leverage to negotiate as well.

Alternatively, you could consider working with a low-commission real estate agent, who will likely charge much less than a traditional agent would (usually 1 to 1.5 percent of your home’s sale price). However, since they’re receiving a smaller commission on each property, these agents are typically focused on volume. As a result, you might not receive as much personal attention as you would with a traditional Realtor.

There are also brokerages and agents who work on a flat-fee basis. In other words, no matter how much your home sells for, they’ll receive a set amount rather than a percentage of the sale price.

If you want to avoid Realtor fees and sell your house quickly, another option could be selling to an iBuyer or a company that buys houses for cash. Both options will allow you to finalize your home sale fast, without paying any agent commissions. But the offers from these buyers will be less than you’d likely fetch in a traditional sale, and some charge service fees that are equivalent to what you’d pay in commission anyway.

Finally, remember that even if you’re not paying Realtor fees, there are still plenty of other closing costs associated with selling your home. For instance, you may be on the hook for things like title transfer fees, attorney fees, property taxes and more. And even if you sell without an agent of your own, you may still be on the hook to pay your buyer’s agent.

FAQs

What percent commission do most real estate agents charge?

Typically, each agent involved in the transaction (one for the buyer, one for the seller) earns somewhere between 2.5 and 3 percent of the home’s sale price as their commission fee. However, the amount is negotiable — and new rules as of August 17, 2024, mean the seller may no longer be obligated to pay their buyer’s agent’s fee.

Do sellers or buyers pay fees to the real estate agent?

Traditionally, sellers have been the ones who covered real estate agent commissions — both for their own agent and for the buyer’s. That changed on August 17, 2024, as a result of the NAR lawsuit settlement. Now, buyers may (or may not) be responsible for paying their own agent directly. The details of each transaction will be different.

How much commission do you pay on a $500,000 home?

It depends on the specific terms of each agent’s commission. Commissions usually total somewhere between 5 and 6 percent of the home’s purchase price — on a $500,000 transaction, 5 percent comes out to $25,000 and 6 percent comes to $30,000.

This article was originally published by a www.bankrate.com . Read the Original article here. .

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Real Estate Commission Changes Are Here For Buyers, Sellers | Bankrate

August 22, 2024 No Comments

The National Association of Realtors (NAR) agreed to new rules around real estate commissions as part of a lawsuit settlement in March. As of August 17, they’re actually rolling out — and consumers face a deluge of confusion and conflicting predictions.

One narrative predicts a coming utopia for homebuyers: A price war will erupt, and commissions will plunge amid a new wave of competition among buyers’ agents. A competing narrative goes in the opposite direction: Under the new commission structure, buyers will realize they’re on the hook for thousands and decide not to use agents at all. NAR, meanwhile, has portrayed the changes as minor tweaks rather than a major shift.

The opposing narratives underscore just how complex Realtor compensation has always been — and how much more complex it just got. Here’s a look at the new commission structure and what it could mean for both homebuyers and sellers.

How real estate commissions used to work

Traditionally, when a home seller hired a real estate agent to represent their listing, the seller agreed to pay a commission. The national average has been about 5 percent of the home’s sale price, typically split down the middle with 2.5 percent going to the listing agent and the other 2.5 percent to the buyer’s agent. (On a $400,000 home, 5 percent comes to $20,000, or $10,000 for each agent.)

Who pays?

Even this has been a bit murky. Agent fees came out of the seller’s proceeds at closing, but it’s reasonable to assume that the seller adjusted their price accordingly — the fees were baked into the home’s sale price. And so the buyer ultimately paid, just not directly to the agents: That extra 5 percent was rolled into the home’s sale price.

What’s changing?

The biggest change is that listing agents (the agents who represent home sellers) may no longer make offers of compensation to buy-side agents on any NAR-affiliated multiple listing service (MLS). In addition, a buyer’s agent must now have a written contract with a home shopper, clearly specifying their fee, before they may show that client a house. Until now, NAR encouraged but didn’t require written agreements between buy-side agents and buyers.

A federal judge gave preliminary approval to the settlement in April 2024, and the final holdout among the brokerages named in the suit — HomeServices of America, part of Warren Buffett’s Berkshire Hathaway — also settled in April. While final court approval is not expected until November, the rules took effect August 17.

Compared to the old model, the new version offers a greater level of transparency for consumers — homebuyers now will be fully aware of how much they’re paying for an agent’s services. “It’s always good when people understand what they are and are not paying for,” says David Druey, Florida regional president at Centennial Bank.

An important aspect of the new model for agents: While the new rules prevent listing agents from posting buy-side commissions on the MLS, as they used to, sellers and listing agents still can agree on the amount off the MLS. That means it’s OK to offer compensation amounts verbally, in emails or texts, and even on their brokerage’s own website, as long as it’s not done on the MLS.

“Although sellers can elect not to pay any buyer agent compensation, that doesn’t mean they will avoid the economics,” says Budge Huskey, president and chief executive of Premier Sotheby’s International Realty in Naples, Florida. “Buyers may easily write into any offer a contingency requiring that the seller cover the cost, or may request other concessions, such as closing cost assistance in the dollar amount they are paying their representative.”

Does this mean real estate commissions are now negotiable?

Technically, real estate commissions always have been negotiable — a theme NAR long has stressed. Practically, though, the picture gets complicated. In many cases, Realtors are more skilled at negotiating than their clients, so the consumer comes into the negotiation at a disadvantage. What’s more, the buyer’s agent commission was previously determined by the seller, not by the buyer. The new rules shift that responsibility to buyers, who now will discuss compensation directly with the agents representing them.

Is this good or bad for consumers?

Until we see how things shake out over time, the answer really depends on who you ask. Some foresee a near-nirvana for consumers: Vishal Garg, CEO of mortgage company Better, predicts the settlement will unleash a “buy-side price war” — buyer agents will begin competing fiercely for clients.

Others fear a darker turn. Ken H. Johnson, a real estate economist at Florida Atlantic University and a former real estate broker, says the new rules just add another layer of complexity to an already-confusing process.

“No longer advertising buyer agent commissions will only create a more confused and drawn-out transaction process as buyers, sellers and agents will have to negotiate the fee, who will pay for it and how much will be paid by each party,” Johnson says. “Due to this added level of complexity, buyers will almost certainly have to negotiate with more sellers before they find the deal they are satisfied with. Thus, the house-hunting period will extend for the average buyer.”

Concerns for first-time buyers

Many in the real estate industry worry that first-time homebuyers — those who need expert guidance the most, and who are already severely hampered by high prices and high mortgage rates — will be priced out of professional representation. If commissions no longer come out of the seller’s proceeds, the thinking goes, buyers won’t have an additional $7,500 or $10,000 to pay an agent.

“Most of those buyers are scraping the barrel to the bottom to come up with a down payment,” says Dave Liniger, chairman and co-founder of RE/MAX. (The firm was one of the large brokerages named as defendants in the suit along with NAR; RE/MAX settled last year for $55 million.)

For now, buyers can’t roll commission costs into their mortgages under the new rules. But industry players widely expect the Federal Housing Finance Agency, overseer of mortgage giants Fannie Mae and Freddie Mac, to change those rules.

“I think there’s going to be pressure on them to allow that,” Liniger says. “The industry needs first-time buyers.”

Indeed, NAR already has been attempting to nudge the mortgage industry in that direction: “We are talking with Freddie and Fannie to see what can be done,” says Lawrence Yun, NAR’s chief economist.

This article was originally published by a www.bankrate.com . Read the Original article here. .

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The Future Of Real Estate Commissions | Bankrate

August 22, 2024 No Comments

Real estate commissions have survived the rise of the Internet and decades of attacks from disruption-minded discounters. Now, finally, they might be coming down.

A federal lawsuit has forced changes to the way consumers negotiate and pay real estate agents. In October 2023, a federal jury in Missouri found that the National Association of Realtors (NAR), along with several large brokerages, conspired to inflate Realtors’ commissions. The brokerages all settled out-of-court, and in March 2024, NAR settled as well, agreeing to pay $418 million in damages and change some of their longstanding rules. (Final court approval is expected in November.) Here’s what it means for homebuyers and sellers.

How real estate commissions are changing: A ‘price war’?

As of August 17, home sellers are no longer automatically responsible for paying both their own agent and the buyer’s agent. Instead, homebuyers who want representation may have to pay their own agents separately: Under the new system that NAR agreed to in settling the suit, when a home hits the market, listing agents will no longer specify how much the buyer’s agent will be paid. Instead, that fee will be negotiated separately between the buyer and the buyer’s agent.

Next up, perhaps: Full-throated price competition among buyers’ agents. “You’re going to see a buy-side price war by next year,” says Vishal Garg, CEO of mortgage company Better.

Technically, real estate commissions have always been negotiable. Practically, though, agents are more skilled at negotiating than their clients, and commissions have clustered in the range of 5 percent. The new rules set the stage for buyer agents to aggressively market their fees. Stephen Brobeck, senior fellow at the Consumer Federation of America, expects commissions will ultimately fall below 4 percent, maybe even to 3 percent. “Over time, more agents will feel free to offer different types of compensation, and more consumers will comparison shop and negotiate commissions in a more transparent marketplace,” he said.

A new era of competition among buyer agents is coming soon, says Garg. “In the best-case scenario, consumers are going to shop around for buy-side agents in the same way they shop around for mortgage lenders,” he says.

A financing wrinkle

There are still many details to be worked out. If the buy-side agent is no longer paid from the listing commission, then that means the buyer is responsible for paying their agent directly — a sum that would average about $10,000, based on a 2.5 percent commission and a $400,000 sale price. For now, buyers aren’t allowed to roll that amount into their mortgage to be paid over time. However, it’s possible that the Federal Housing Finance Agency will change its rules to allow Fannie Mae and Freddie Mac mortgages to include commissions. Industry experts expect federal regulators to tackle that topic in the near future.

How much do commissions cost?

Under the longtime standard, if a homeowner sold a property for $400,000, about average for existing homes in the United States, the seller paid a commission of around 5 percent, amounting to $20,000. That amount was then split between the seller’s own agent and their buyer’s agent (which hardly mattered to the seller, who still had to pay the full amount regardless).

Long ago, 6 percent was the going rate for real estate commissions; 3 percent to each agent. But after decades of competition and regulatory scrutiny, the typical commission now is slightly less than 5 percent, according to data from Anywhere Real Estate, the parent of Coldwell Banker, Century 21 and other large real estate brands. In its filings with securities regulators, publicly traded Anywhere reports that its average commission “side” — half the commission — is currently about 2.4 percent.

While commissions briefly rose during the Great Recession and again in 2023, rates in general have been falling steadily for decades. For Realtors, this decline in commission rates has been offset by rising home prices: They’re getting a smaller piece of the pie in terms of their percentage-based fee, but the pie is getting bigger.

About the NAR lawsuit

In the case that went to trial in 2023, Missouri home sellers alleged antitrust violations by NAR and four major brokerages: Keller Williams, Anywhere, RE/MAX and HomeServices of America. Anywhere and RE/MAX settled before trial — paying $83.5 million and $55 million in damages, respectively — while the other defendants opted to take their chances in the courtroom.

The jury ruled against the industry, and a judge ordered NAR and the two remaining brokerage firms to pay $1.8 billion in damages to home sellers. Keller Williams eventually settled for $70 million, and HomeServices of America, part of Warren Buffett’s Berkshire Hathaway, settled for $250 million. NAR also agreed to pay up and change its practices.

Other dramas

NAR has recently faced other headwinds in addition to the antitrust lawsuit and related cases. A sexual harassment scandal led to the resignation of the organization’s then-president in 2023, and the organization’s next president and longtime CEO then stepped down as well.

All the drama has created unease and unrest in the ranks. Redfin cut ties with the trade group, requiring many of its brokers and agents to cancel their memberships, and other brokerages have followed suit. In addition, two influential real estate agents have launched a competing trade group, known as the American Real Estate Association (AREA).

One of the new group’s cofounders, Jason Haber — a broker/agent at Compass in New York City and an outspoken NAR critic — described AREA as an alternative, not a replacement. “We’re not trying to replace NAR. We’re not trying to replicate NAR,” he said. “They have a 108-year head start.”

Competition and the MLS

The residential real estate industry has long presented a dichotomy. On the one hand, it has essentially controlled the marketing of properties for sale through a nationwide network of multiple listing services (MLSs). That reality has led to grumblings about collusion and price-fixing, along with scrutiny from the U.S. Department of Justice.

On the other hand, real estate sales is a relatively easy business to get into, as evidenced by NAR’s membership rolls of more than 1.5 million agents. To earn a real estate license, an agent typically needs to take a couple of classes and pass a state exam. No college degree is required, and the costs of entry are modest. However, the settlement is expected to thin the ranks.

Lawrence Yun, NAR’s chief economist, pointed last year to these low barriers to entry as evidence that competition is alive and well: “Real estate is a perfectly competitive industry,” Yun said during the organization’s annual conference in November.

Brobeck, the consumer advocate, disagrees with that assessment. “It’s not a free market right now,” he said. “There’s intense competition for clients. But there’s no competition on rates. In a normal marketplace, you compete based on marketing, but also on the price you charge.”

Meanwhile, the industry mantra has long held that commissions are negotiable, suggesting that sellers and buyers call the shots when it comes to how much they pay agents. In practice, though, consumers buy or sell a home only once every 5 to 10 years, if that, and many aren’t knowledgeable enough about the process to successfully negotiate the rate down.

“Consumers are at a disadvantage,” Brobeck said. “They buy and sell homes infrequently, and they’re mostly concerned about sale price and timing.”

Historically, discounters have not succeeded

For decades, detractors have predicted the demise of real estate commissions. These fees were sure to go the way of stockbrokerage commissions and travel agency fees, the naysayers said. Instead, real estate commissions have proven stubbornly resilient.

It’s not for a lack of trying. Many disruptors have seen commissions as a problem to be solved, but most have fallen short of reshaping the industry.

In the early 2000s, for instance, a splashy discounter known as YourHomeDirect (and later Foxtons) offered 2 percent commissions in New York and New Jersey. But after advertising heavily and gaining market share, it ultimately collapsed.

A decade later, London-based Purplebricks pushed into the U.S., wooing sellers with a flat fee of $3,200. It, too, overestimated demand and pulled out of the U.S. market in 2019.

One high-profile discounter, Seattle-based Redfin, has achieved greater staying power. It launched as a cheaper alternative to traditional brokers and touted listing fees of just 1 percent, although it has since shifted to focusing on 1.5 percent listing fees.

How sellers can save on real estate commissions

If you’re not keen on paying agent commissions, here are some alternative options:

Go it alone: Sell your home without an agent in a “for sale by owner” transaction. Between July 2022 and June 2023, 7 percent of home sales were sold by owners without the help of an agent, according to NAR data. But selling without professional help is a lot of work to do on your own, and it technically only saves you one agent’s commission — you may still have to pay your buyer’s agent.

Negotiate: If you don’t want to go it alone, ask agents about their commission rates upfront and compare the terms of each person you talk to. If you think the fee is too high, see if they’re willing to lower it. If both agents in the transaction are from the same brokerage, you might have more leverage to negotiate.

Hire a discount agent: A low-commission real estate agent will likely charge much less than a traditional agent would — usually 1 to 1.5 percent of your home’s sale price. (However, you might not receive the personalized attention you would with a traditional Realtor.) There are also brokerages and agents who work on a flat-fee basis, earning a preset amount on the sale rather than a percentage of the sale price.

Sell to a cash-homebuying company: These companies, which often advertise “we buy houses,” pay in cash, close quickly and typically charge no fees. However, if you sell this way you’re likely to get a lower price for your home than you would with a traditional sale.

This article was originally published by a www.bankrate.com . Read the Original article here. .

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How new rules could change the real estate industry

August 20, 2024 No Comments

The National Association of Realtors (NAR) requires the implementation of two policy changes no later than Saturday, August 17.

San Luis Obispo County real estate agent Christa Lowry explained the two changes taking place.

“The first change is that buyers will not be able to enter a home without a written and signed buyer’s representation agreement with their buyer’s agent,” Lowry said.

That agreement negotiates a percentage of the sale the buyer will pay their agent. Prior to this rule, buyers could opt out of paying the buyer a commission.

“They had the option to not, but it was standard that they did,” Lowry said.

She added that while this new change requires the buyer to pay the buyer’s agent a commission, that commission fee is agreed upon by both parties.

“It’s a negotiable amount. That’s the most important thing to know,” Lowry said.

The second change prevents a listing agent from disclosing an agent’s commission or concession on the Multiple Listing Service. Instead, buyers will need to contact the listing agent directly about commission or concession fees.

“Buyers used to be able to call an agent and say, ‘Hey, I’d like to see five properties.’ There [was] no written agreement. There [was] no talk about commission or concession,” Lowry said. “Now they have to sit down and have that conversation with a buyer’s agent.”

Jenny Heinzen works as a broker for Vineyard Professional Real Estate, a luxury real estate firm in Paso Robles.

She said most of these changes involve a restructuring of business.

“It’s just kind of a work-around with the paperwork,” Heinzen said.

However, she said first-time home buyers could be impacted by the changes.

“A lot of times first-time home buyers are stretching for payment and if those first-time home buyers are asked to pay their buyer’s agent commission, that affects their down payment capabilities,” she said.

Heinzen noted that those costs can be avoided by structuring agreements differently.

“Our goal on our listings and most of the agents within the county is to get compensated by the seller,” Heinzen said.

She said for those new to buying a home or looking for help navigating these changes, finding the right agent is key.

“It’s going to be really important to work with good, experienced agents who are selling the types of property that you want to buy or sell,” Heinzen said. “Find a good agent and a good agent will educate you.”

This article was originally published by a www.ksby.com . Read the Original article here. .

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Our Chicago: New Rules For Real Estate Commission

August 17, 2024 No Comments

CHICAGO (WLS) — Things are about to change when it comes to buying and selling a home.

ABC7 Chicago is now streaming 24/7. Click here to watch

Starting Saturday, August 17, 2024, new rules will take effect regarding real estate commissions.

The change comes as part of a settlement of class action lawsuits filed by homeowners against the National Association of Realtors.

Those lawsuits claimed homeowners were forced to pay inflated commissions to sell their homes.

The National Association of Realtors has denied any wrongdoing.

“As a result of the NAR settlement, buyers are going to be asked to sign a representation agreement with the brokerage where their agent works,” real estate Lawyer Heather Neveu with Chilton Yambert Porter LLP said. “It’s going to be an agreement where the buyer is agreeing to compensate the realtor for the work they’re performing.

New rules will take effect regarding real estate commissions, after a settlement was reached against the National Association of Realtors.

Co-Founder of Weinberg Choi Residential Tommy Choi said this type of agreement is not new.

“It’s something that’s always been around, a buyer-broker agreement,” Choi said. “It’s something most real estate agents have practice. Now, it’s just something that’s going to become even more clear. And part of the process when it comes to homebuying.”

New rules will take effect regarding real estate commissions, after a settlement was reached against the National Association of Realtors.

“I think it’s going to be a short-term thing because I don’t think it was wisely used,” Neveu said. “I think there might just be a learning curve involved as buyers are going to be now across the board shown this agreement. The responsibility for paying their realtor is now going to shift to the buyer where before an agent representing a buyer was able to honestly tell their client you don’t have to pay me.”

She added that buyers are now going to have to learn about their options concerning how realtors are paid.

Another change is the offers of compensation, which can no longer take place on the MLS.

Choi explained there’s been a lot of misinformation about these changes.

“The biggest thing is that consumers think commissions go away. Sellers don’t have to pay the buyers. They never really had to. It’s in their best interest because if they don’t it limits the buyer pool. And the biggest challenge this could pose in that situation, is affordability for a buyer,” Choi said.

This article was originally published by a abc7chicago.com . Read the Original article here. .

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Settlement of a Federal Lawsuit Will Change How Real Estate Agents Are Paid

August 13, 2024 No Comments

click to enlarge James Buck Vicky Phillips is selling her Westford home without a Realtor.

Before she put her Westford home on the market, Vicky Phillips did some math. With the four-bedroom home priced at $808,000, Phillips estimated it would cost her about $48,000 in commissions for a real estate agent to handle the sale.

Phillips decided to keep that money and sell the home herself. In May, she posted it on Picket Fence Preview, a website featuring homes that are for sale by the owner. She also paid a real estate agent $499 to offer the house on the multiple listing service, a system that shows all the properties for sale through brokers.

“It isn’t complicated,” said Phillips, who owns a business and noted that she has signed much more detailed contracts than the one she’ll use in selling her home.

She’s shown her home five times, a process that usually takes her about two hours, including tidying up. If she contracted with a real estate agent to handle the sale, that person would expect the standard 2 or 3 percent commission, as much as $24,000. If a buyer’s agent were involved, as is often the case, that person would take another 2 or 3 percent of the sale price.

“Real estate agents are great, but what are you paying for?” Phillips asked.

Questions like Phillips’ have roiled the real estate profession for years, and recently a rebellion of home sellers succeeded. In March, the National Association of Realtors agreed to pay $418 million in damages to settle a 2019 federal lawsuit that accused the organization of violating antitrust laws by adopting rules that created an industry-wide standard commission.

The settlement specifies that the NAR must drop rules that require the agent for the home seller to offer payment to the agent for the buyer. Those rules have resulted in the standard 5 to 6 percent commission being incorporated into the price of most homes for sale. Under the settlement, it will be easier for buyers and sellers to negotiate commissions with their real estate agents.

The settlement made national headlines, with some analysts predicting that the price of buying a home would drop significantly as a result of the decline in commissions.

Smaller commissions would be good news for Vermont home sellers, but local experts say the soaring cost of buying a house is mainly the result of the spike in home values. The median price of a house sold in Chittenden County climbed by more than $100,000 between 2020 and last year, to $460,500. With the typical commission of 5 or 6 percent, someone selling that home would pay the agents involved as much as $27,000.

Many real estate agents insist the national settlement won’t change anything in Vermont. Local agents have always been up front with homebuyers and sellers about how much commissions would cost — and have always been open to negotiation, said Kathy Sweeten, CEO of the Vermont Association of Realtors.

“It’s not going to have a huge effect, because we already do this,” Sweeten said in an interview. That’s the position many of Vermont’s real estate agencies are taking, too.

“We’ve been doing business this way for many years now with our agency disclosures,” Four Seasons Sotheby’s International Realty CEO Laurie Mecier-Brochu said.

But home industry analysts say the settlement will likely free up consumers to bargain with agents for their services. The Consumer Federation of America, an advocate for nonprofit consumer groups, said that while negotiating has always been an option in theory, contracts are usually written by lawyers for local real estate associations. Under the existing system, many homebuyers are unaware they’re paying a commission of 2 or 3 percent to their agent, because it’s incorporated into the home seller’s fees and therefore into the price of the home.

Starting next month, buyers who hire an agent to show them homes will be asked to sign a contract spelling out what they will pay the agent if there is a sale, so the cost will not be hidden in the sale price of the home. The advocacy group said the settlement will create more freedom and transparency for agents and consumers.

Change won’t happen overnight.

“The residential real estate marketplace will take some time, perhaps several years, to fully process the implications of this settlement,” the Consumer Federation said in a statement after the NAR settlement was announced.

Not all agents are paid by commission. Some charge a flat fee — $3,500 is common — instead of a commission, using that transparency as a selling point. And there have always been homeowners such as Phillips who avoid commissions altogether by tackling home sales on their own.

Changes in technology are making that easier. Nowadays, websites such as Zillow and Redfin display the homes that are listed on the MLS, making them available online to anyone who knows how to look for them. When she was shopping for a house two decades ago, Phillips noted, the real estate agent would print off MLS listings and mail them to her, a cumbersome process that gave the agent control over which properties Phillips could consider.

Online listing services also help would-be home sellers see what similar properties are going for — and provide valuable information to buyers, such as how much the home sold for in the past.

“Before, you couldn’t really go on Zillow and find comparables and past histories and what the taxes were” for houses on the MLS, Phillips added.

Demand for homes is high in Vermont, making it a good time for sellers to try their hand at going it alone.

Before she put her Montpelier modular home on the market in May, Tammy Parish asked for advice on Front Porch Forum about selling without an agent. She got a flurry of responses from sellers who had done that — as well as several pleas from people who wanted to tour her home.

“My phone blew up. It was people giving me advice saying, ‘Yes, you can do it’ or ‘No, it’s more detailed than you think,'” said Parish, who added that she sold her home for $240,000 the following weekend to one of the people who had responded to her query.

Parish hired a lawyer to help with a contract, paying around $2,000, she said. A 5 percent commission would have set her back around $12,000.

“That’s a lot of money to give to someone else for putting pictures out there and marketing it,” she said.

Phillips said more than 25 agents have gotten in touch since she posted an ad for her Westford home on Front Porch Forum in May.

“They all want to represent me,” said Phillips, who thinks a lack of inventory and high interest rates may have created a very slow market for agents. She added that there are times when using an agent is essential. She’s looking for property in Asheville, N.C., where she’ll build her next home, and she said the agent alerted her that land prices were lower in a neighboring town because of a local paper mill.

“She said, ‘On the right day you don’t smell it, but on a bad day, not only do you smell it everywhere, the fumes are toxic,'” Phillips said. “Good advice.”

If more negotiations lead to lower commissions, as expected, some agents might leave the profession. The number of real estate agents licensed in Vermont jumped during the pandemic, reaching 3,072 last year — the most since the Secretary of State’s Office started keeping records in 2008. Right now, 2,843 people are licensed to sell real estate, according to the office.

click to enlarge James Buck Mikail Stein of RE/MAX North Professionals showing a house

It’s a tough way to make a living, according to Mikail Stein of RE/MAX North Professionals, who sells about 40 homes a year. Stein said his overhead is high and his hours are long. Income is unpredictable.

“Only in the last two years of my career have I had a winter where I wasn’t freaking out about where things were financially,” Stein said. “And hourly-wise, most people do way better than me.”

Stein thinks career professionals such as him will stay in the business, and if commissions drop, part-time, new or unskilled agents will be most likely to leave.

“I hope what it ends up doing is providing the public with better service,” he said of the NAR settlement. “For those of us who do bring high service, the compensation will be just. And for those who don’t, the market will say, ‘You’re not providing enough.'”

A Game-Changing Federal Case

The lawsuit
A group of Missourians who had used real estate agents to sell their homes filed a 2019 class-action lawsuit against the 1.5 million member National Association of Realtors and several multistate real estate brokerages. The suit alleged that the defendants had conspired to inflate real estate commissions paid by the homeowners.

The details
The lawsuit took aim at the NAR’s “cooperative compensation” rule, which requires the home seller’s agent to offer compensation to the agent for the buyer in order to add the home to a multiple listing service. The suit charged that the NAR, by controlling almost all the multiple listing services in the U.S., was wielding monopoly power to keep commissions artificially high.

The verdict
A federal jury in Missouri ruled for the homeowners in October 2023, awarding them $1.8 billion in damages. The NAR said it would appeal.

The settlement
Instead, in March, the NAR settled the case for $418 million in damages and an agreement to change some of its practices.

What will change?
Sellers’ agents won’t set the commission earned by the buyer’s agent. Instead, homebuyers will negotiate directly with those agents for their services. The changes are due to take effect in August.

What’s next?
In Vermont, analysts say it is too soon to predict what, if any, impact the settlement will have in the state. Prices are high, driven by a critical shortage of inventory and high demand.

“If I had to guess, I would say Realtors will become less powerful, and maybe there will be more fee-for-service” real estate transactions, said Jeff Lubell, a Norwich resident who works as a principal associate in housing policy for Abt Global, a consulting firm in Rockville, Md. “We’ll see different patterns in different places.”

An unintended consequence?
Some real estate companies and analysts say the settlement will hurt low-income homebuyers. Those buyers may not be able to afford to pay an out-of-pocket commission to their agent. Previously that commission was incorporated into the price of the home, and thus into the mortgage paid over time.

This article was originally published by a www.sevendaysvt.com . Read the Original article here. .