BOISE, Idaho — Some have said a landmark settlement could change the way we buy and sell homes, and it could also lower home prices. But others have said not much is going to change at all. It has to do with commissions charged by real estate agents.
The powerful real estate trade group, the National Association of Realtors (NAR), said, as part of a settlement announced recently, they will pay $418 million to help compensate home sellers across the United States.
Dana Rice, a Washington DC Real Estate Agent, said, "I think it's a benefit to both buyers and sellers."
The NAR also agreed to do away with policies that for decades helped set agent commissions, moving to resolve lawsuits that claim the rules have forced people to pay artificially inflated costs to sell their homes. The class action lawsuit from home-sellers argued the NAR's rules governing homes listed for sale on its Multiple Listing Services (MLS) unfairly propped up agent commissions. They say the rules also incentivized buyers' agents to avoid showing their clients homes or other listings where the seller's broker was offering a lower commission to the buyer's agent than the "standard" 5-6%.
"People were accusing real estate agents of having a standard rate. And there's no standard, there's no normal, there's no historical, there's no...any of those words," said President of Boise Regional REALTORS® Elizabeth Hume.
Hume is also a broker and has two decades of experience in real estate. She said she's never seen what the lawsuit alleges, "It's actually against our code of ethics to not show a property that's not the rate which an agent might want."
As part of the settlement, the NAR agreed to no longer require a broker advertising a home for sale on MLS to offer any upfront compensation to a buyer's agent. The rule change leaves it open for individual home sellers to negotiate such offers with a buyer's agent outside of the MLS platforms, though the home seller's broker has to disclose any such compensation arrangements.
Hume stresses that buyers and sellers have always been able to negotiate those fees, "That's always been the case. I have instances all throughout my career that that that's happened."
Going forward, the lead attorney for the plaintiffs in this lawsuit, Michael Ketchmark, said the settlement changes the way we buy and sell homes and it could also lower home prices, "This is hitting the reset button on the housing market. This is great for Americans and this is great for homeowners."
Hume doesn't see this being a game-changer, since she doesn't believe there was a problem to begin with. In fact, the National Association of REALTORS® did not admit to any wrongdoing. So, why the settlement? Hume said, "NAR's goals were to preserve the choice of the consumers and then move forward in a positive way. So, both members and consumers would feel comfortable. It allows us to achieve those goals, allow real estate agents to continue to sell real estate and it allows consumers to understand that they still have a choice."
Buyers also still have the choice to even have an agent or not. But Rice says, if you go it alone, you need to make sure you know what you're doing, "My fear is that in looking at the fee structure and what it costs, people think, well, how hard could this be? I don't need representation. You're walking in you've never purchased a house before, and the seller has sold 10."
Hume, as you might imagine, recommended getting an agent as well, whether you’re buying or selling, but said it's a great idea to shop around for someone who really knows what they're doing and will advocate strongly for you. She said you might want to interview some prospective agents and even talk to the broker of that agent, since, as Hume puts it, they're the owner of the listing and employer of the agent.
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