The National Association of Realtors recently announced a seismic settlement that has caused significant disruption in the real estate industry, even before it has been approved by a judge. The potential impact of the settlement has already led some Americans to adjust their behavior in buying and selling homes. Some prospective homebuyers are planning to restart their housing search after the new rules are implemented to potentially find lower home prices, while some homesellers are already lowering or eliminating the commission they offer to buyers’ agents.
The $418 million settlement is expected to transform the current real estate business model, where home sellers typically pay both their agent and the buyers’ agent, resulting in inflated housing prices. If approved, the settlement comes with new rules for Realtors that could have far-reaching effects on the industry. The proposed changes could help to lower home prices, creating a more competitive housing market where commissions are no longer tied to the selling price of homes.
The potential impact of the settlement is already being felt by individuals like Jeremy Cannon, a teacher in California who hopes that the new rules will make homeownership more affordable. Increased competition in the housing market, with lower commissions and potentially decreased home prices, may provide relief for buyers like Cannon who have faced challenges due to rising home prices. The settlement aims to uncouple commissions from home prices and promote a more competitive housing market.
Under the proposed settlement terms, sellers’ agents will no longer be required to share their commission with buyers’ agents. This change could lead to lower commission costs being baked into home listing prices, ultimately resulting in decreased home prices. Many experts believe that lower commissions could pave the way for reduced housing costs, making homeownership more accessible to a broader range of individuals.
Matt Hanley, an insurance worker in Minnesota, adjusted his approach to selling his home after the NAR settlement was announced. Instead of offering to split the commission between his agent and the buyers’ agent, he chose to write “0%—negotiable” as the buyers’ agent commission on his home’s listing. While some critics warn that this move may deter buyers’ agents from showing his home, Hanley believes that favorable market conditions and high demand may still attract buyers regardless of the commission structure.
Mariya Letdin, a business professor, emphasizes that the settlement has highlighted the importance of consumer advocacy and negotiation in real estate transactions. While the ruling has the potential to bring about significant change in the industry, Letdin suggests that it will require active participation and advocacy from consumers on both the seller and buyer sides. By exercising their legally protected voice and advocating for themselves, consumers can drive further change in the real estate industry and promote transparency and fairness in transactions.
