Living Local - Big changes coming to the Real Estate market?
Tamara Burton
This almost feels like “old news” by now and for some of you it is. But I would be remiss if I didn’t address the newest elephant in the room, even if just briefly.
The National Association of Realtors (NAR) reached a landmark settlement in a lawsuit a little over a week ago, creating changes in how buyer’s agents will be compensated.
The lawsuit claimed NAR’s rules set a standard 6% commission, but if you’ve ever asked any agent, commission rates have always been negotiable. It is true, there has always been a “going rate” with an average of 6% among Manhattan realtors (and across the nation), but it truly has always been negotiable with each transaction. If a seller didn’t want to pay the suggested amount by the agent, they could negotiate and/or find another realtor. The latter has often happened.
Some have speculated the changes could ultimately lower home prices, but that remains to be seen. I believe if home prices are affected, it definitely won’t happen overnight. However, a more readily available outcome is the new rules could shift the burden of who pays the buyer’s agent’s fee or commission.
Under the current format, sellers have traditionally footed the costs for a buyer’s agent commission. That responsibility will no longer (necessarily) be solely on the seller as of July. There will likely be more innovation on how the buyer’s agent is compensated. As of July, agents and their buyers will be required to have a signed exclusivity agreement before showing a buyer homes, and how they are compensated will have to be predetermined.
These agreements will lay out the services that an agent can provide and how they expect to be compensated once a purchase has been made.
I think it will be interesting to see how this new dynamic shakes out. It is likely to alter on each transaction, and adjust depending on the buyers, sellers, agents, and the demand for your home.
Agents that have always been client focused, instead of commission focused, agents will keep doing business with their client’s best interest as the priority. One thing that hasn’t changed, is home buying is still a HUGE investment, and maybe the biggest investment you will make in your lifetime. The importance of procuring proper representation when selling or purchasing your home will not go away.
As buyers, sellers and their agents all adjust to this new normal, I am excited to see what innovation occurs. Ultimately, saving buyers and sellers money is not a negative. In the meantime, please don’t hesitate to reach out with any questions you have about the Manhattan market, and real estate happenings in our community.
Tamara Burton l tamara@thealmsgroup.com l 913-484-0808
