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

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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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New real estate rules for selling homes take effect

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New real estate rules for homebuyers and sellers went into effect last weekend.

The rules, which impact the way commissions work, stem from a $418 million settlement between the National Association of Realtors and home sellers earlier this year.

The federal class-action lawsuits claimed that homeowners were being forced to pay artificially inflated real estate commissions when they sold their homes.

The rules boil down to two significant changes.

First, under the new rules, homes listed on a Multiple Listing Service, or MLS, will no longer include a seller’s offer to cover the cost of a buyer’s agent’s services.

“That’s the biggest change for us in Western Pennsylvania. Now, we are not allowed to advertise the buyer’s agent’s commission in the MLS,” said Scott Cavinee, a real estate agent for SWC Realty in Uniontown.

A seller can still allow a commission split, but the agreement cannot be listed on the MLS.

Second, home buyers who want to work with an agent will have to sign an agreement up front that details exactly what commission the buyer will pay the agent – including whether it’s through a commission split with a seller’s agent – before working together or touring homes in person or virtually with their agent.

That’s not entirely new, said Beverly A. Herndon, president of the Washington-Greene Association of Realtors, as about a dozen states already required those written agreements.

“Pennsylvania has had a buyer agency agreement since 1999 – we’ve been doing it for about 25 years – so nothing in regard to that should change,” said Herndon.

Traditionally, an agent for a person selling a home would typically take a 5 or 6% commission on a home sale. It was intended to be shared with the buyer’s agent and was considered a standard, if informal, practice.

Armand Ferrara, a real estate agent with SWC Realty in Belle Vernon, noted commission has always been negotiable.

“Commission has always been negotiable,” he said. “Let’s say I’m going to list your house and I’m going to list for 6% commission, but we want to give the buyer agent a part of that commission, maybe 3%. You might say, ‘I don’t want to give the buyer agent anything and I don’t want to give you 6%. Commission is optional; that’s not new.”

Cavinee said sellers should be aware that buyers can still ask the seller to pay some, or all of the fees of their agent.

“If the only offer coming in is a buyer who asks for the seller to cover “X” percent, the seller will do it if he wants to sell that house,” said Cavinee. “It’s like saying, ‘Will you leave that living room suit?’ It’s part of the negotiations.”

If a seller doesn’t agree to pay the buyer’s agent, the buyer is responsible for it, which can impact first-time and low-income buyers who might not have a lot of cash, Cavinee said.

Herndon said it’s important to have a trusted, licensed agent to navigate the complicated process of purchasing or selling a home, which is often the biggest financial purchase a person will make.

Kim Shindle, vice president of communications for the Pennsylvania Association of Realtors, agreed.

“It’s important for home buyers or those selling their homes to understand the important role Realtors play guiding them through home buying or home selling,” she said. “They lend their knowledge about the local marketplace, where each area is different.”

Herndon said it’s too soon to tell what impact the changes will have, but said ultimately, the purpose is to provide transparency “so the consumer is fully informed as to what is required on both sides.”



This article was originally published by a www.observer-reporter.com . Read the Original article here. .

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

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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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Real Estate Agent Fees And Realtor Commissions | Bankrate

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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.



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How new real estate rules are set to reshape home buying and selling across the U.S.

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How new real estate rules are set to reshape home buying and selling across the U.S. – CBS News

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Starting Aug. 17, new regulations will change how real estate commissions are handled, potentially lowering costs for homebuyers and sellers. Under the new rules, buyers and sellers will have the opportunity to negotiate commissions directly with their agents, a shift that could impact everyone involved in the real estate market.

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How new real estate rules will impact Minnesota Realtors, home buyers

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EDINA, Minn. — The experience of buying or selling a home is changing. A recent National Association of Realtors settlement now requires buyers and sellers to negotiate house sale commissions, including who pays and how much.

A recent overhaul changed the way realtors get paid to help people buy and sell their homes. It’s part of a $418 million settlement announced in March between a nationwide group of homeowners and the National Association of Realtors.

“For consumers, it’s going to be more transparent and it really should be a smooth process,” said Jamar Hardy, president of Minneapolis Area Realtors. “Historically, a seller’s agent charged home sellers a fee, usually 5% or 6%, which was then split with the buyer’s agent. On a $500,000 home that would be $30,000 in commission.”

Lawsuits alleged the standard practice violated antitrust laws, though the association has long argued that the commissions were always negotiable.

Moving forward, buyers who previously didn’t have to pay a commission to their realtor who helped them purchase a home will be expected to pay for the service. Sellers will have to pay for their agent but will no longer have to pay for the buyer’s agent.

Listing agents and sellers will be prohibited from including offers of compensation to buyer agents on the multiple listings services, better known as the MLS.

“If sellers aren’t offering payouts right up front, that negotiation is going to happen at a time of offer, so we’ll see a little change there because again, that offer of compensation won’t be visible to us anymore,” said Hardy.

Real estate commissions in Minneapolis have fallen minimally since March, after the announcement of the settlement. It fell from 2.6% in March to 2.56% in mid-July.

Analysts with TD Cowen expect the settlement could reduce realtor commissions by 25% to 50%. Another change requires buyers’ agents to discuss their compensation upfront.

“I think that’s going to be the biggest change for both consumers and agents. It’s not just allowing somebody to walk through that house because we have a showing, let ’em run through really quick to see things,” said Hardy.

There are 22,000 real estate agents in Minnesota. Hardy says some may leave the business because of the changes,but others will thrive.

“I think competition is going to win out in the end, and people are going to truly know what we do for a living and understand what they’re paying for,” said Hardy.

The new rule changes the National Association of Realtors agreed to as part of the settlement take effect on Saturday.

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Derek James anchors Saturday and Sunday evening newscasts and contributes stories during the week on “The 4.”



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

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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.



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The Future Of Real Estate Commissions | Bankrate

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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.



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Florida’s real estate market has a split personality: What to know if you’re buying or

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Florida’s real estate market has a split personality: What to know if you’re buying or selling in the Sunshine State

Florida’s housing market is a tale of two states. On the coast, condo prices are falling with residents being driven out by high insurance costs and assessment fees, while inland, the cost of single-family homes is holding steady. Local experts say this divergence is driven by soaring insurance premiums and rising assessment fees under new state regulations, which have significantly affected condo owners. [Source: Realtor.com]

Florida house named HGTV’s 2024 Dream Home is now for sale

Every year, television network HGTV hosts a “Dream Home” giveaway, and this time a waterfront Florida home was up for grabs. Marie Fratta, a teacher from New York’s Westchester County, won the pad (and a new Mercedes-Benz and $100K) three months ago, and now it appears she’s looking to get rid of it. [Source: Orlando Weekly]

This Florida city was hit hard when the 2008 housing bubble burst—now prices are falling again

While national aggregate home price indices are hovering around all-time highs, some regional housing markets in states like Florida, Texas, and Louisiana are experiencing home price corrections. This includes the Punta Gorda metro area in Southwest Florida. [Source: Fast Company]

Condo HOA fees jumped 60% in South Florida in past 5 years. Why higher costs are ahead

South Florida condo owners, burdened by spiraling insurance, repair bills and a new state law, saw their association fees shoot up nearly 60% over the past five years — driving some to consider difficult financial decisions to make their next HOA payment. [Source: Miami Herald]

Orlando home-purchase cancellations highest in country

Across the U.S., buyers are increasingly backing out of home purchases as prices rise and mortgage rates remain elevated. Orlando is seeing this trend play out in a more pronounced way than any other major market, with about 900 home-purchase agreements canceled in June, according to a report from Redfin. [Source: Orlando Business Journal]

STAT OF THE WEEK
13.4%
Farm real estate values in Florida jumped by 13.4% from 2023 to 2024. [Source: CVille Right Now]

ALSO TRENDING:

› South Florida real estate firm significantly grows Orlando presence [Orlando Business Journal]
KW Property Management & Consulting has added three new properties to its management portfolio in Central Florida totaling more than 1,600 units. The Miami-based firm has been contracted to oversee two condominium towers in downtown Orlando.

› It’s Ritz-Carlton vs. National as South Beach heavyweights battle over condo for billionaires [Miami Herald]
On Collins Avenue in South Beach, along a strip of jazzy historic mid-century high-rise hotels that have defined the city skyline for decades, two giants are going at it. And the outcome of their long-running battle could forever alter the look and feel of a landmark Miami Beach district that harks back to the city’s Golden Age. Whether that’s for the good for the future of highly popular but perennially troubled South Beach, or a harbinger of its continued erosion, is the gist of the dispute.

› Osceola joins movement to reject tax incentives for affordable housing [Orlando Sentinel]
Joining a growing list of municipalities across the state, Osceola County has decided to opt out of a program that uses tax incentives to boost affordable housing. The board of county commissioners voted swiftly and unanimously last week that Osceola will no longer provide property tax exemptions under Florida’s Live Local Act.

› Tampa reopens Rental and Move-in Assistance Program applications [WTSP]
The city of Tampa’s Rental and Move-in Assistance Program, or RMAP, is accepting new applications beginning Thursday, Aug. 8. The decision to re-open applications comes after significant rent increases in the Tampa housing market over the past few years.

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Buying or selling a home set to change on August 17

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KSHB 41 reporter Grant Stephens covers issues connected to access to housing and rent costs. Share your story idea with Grant.

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There are big changes coming to the way you buy or sell a home.

These changes stem from a series of lawsuits intended to make the home buying process more transparent.

The changes take effect August 17th.

An agent working with a buyer will have to work out an agreement before the prospective buyer and real estate agent look at a property together.

KSHB 41 News staff

Home in Kansas City area

“When a real estate agent says, ‘Hey, starting August 17th, you have to sign this agreement,’ they’re telling you the truth,” said Holden Lewis with NerdWallet.

You may be familiar with the standard five to six percent commission rate you’d have to pay in the past.

It’s split between buyer’s and seller’s agents and is often baked into the total cost of the home.

The changes mean there’s now an extra layer of negotiation that could change that standardized fee.

“It’s gonna specify how much you’re gonna pay that agent,” Lewis said.

Realtors like Kathleen Spiking with the Rob Ellerman Team say it might change how contracts are written and how they’re paid.

KSHB 41 News staff

Kathleen Spiking

“They’re training us on what’s going on, what’s does this look like, how does it appear in a contract,” Spiking said.

But since she’s always been upfront with costs, it won’t change the day-to-day.

“Personally, for me, it doesn’t affect the way that I run my business,” she said. “I still have communication up front with all of my clients, whether they’re buyers or sellers, and I think maybe for people it would be further and more thorough communication at the beginning and during the process of buying a home,” she said.

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