Buying Homes Changes Forever as Realtors Bracing for Major Overhaul
The National Association of Realtors (NAR) has reached a significant settlement of 8 million over four years, effectively reshaping the way real estate agents do business. The unprecedented agreement settles litigation brought by home sellers regarding broker commissions, promising major changes in the real estate market.
Started by a major court ruling in Kansas City, the settlement impact is far-reaching. Traditionally, home sale listing brokers were expected to offer compensation to buyer’s agents upfront. This standard practice of listing brokers offering a proposal of compensation to buyer’s agents will no longer be allowed on the Multiple Listing Service (MLS), effectively breaking the decades-old tradition of set broker fees.
Huge Shift in Commission Structure
With the old practice gone, real estate agents and brokers will need to revamp how they structure their commissions. Sellers will no longer be required to provide offers of compensation to buyer’s agents. Instead, home buyers will have to sign explicit agreements with their brokers, detailing the broker’s compensation before they begin viewing homes. This new system could lead to significant savings for buyers as commissions may be cut in half.
Uncertainty Abounds
Real estate professionals are scrambling to adjust to these changes, which are set to be implemented in mid-July. Smaller brokerages and part-time agents may find it challenging to cope with the shift, potentially affecting their viability. The industry as a whole faces uncertainty in the coming months as everyone adjusts to the new rules and market forces come into play.