Consumer Alert: Changes in the way agent commissions are paid impact home buyers and sellers

This consumer alert is about the profound changes coming to the real estate industry this summer. These changes come after the National Association of Realtors agreed to a $418 million settlement.

This settlement completely changes the way agent commissions are paid, and consumer advocates say it puts more power in the hands of buyers and sellers. Right now, the seller pays their agent commission and the seller’s agent then splits the commission with the buyer’s agent.

For example, let’s say you sell your home for $200,000. If you agree to pay your agent the usual 6% commission, that’s $12,000. Since the 1990s, this commission has been shared with the buyer’s agent. This means your agent and the buyer’s agent would each receive $6,000.

But home sellers sued the National Association of Realtors, saying the system unfairly increased commissions. Here’s why: If you as a seller wanted to negotiate a lower commission with your agent, the buyer’s agent might be less inclined to show their client your home because the buyer’s agent would also receive a lower commission.

A jury agreed with these sellers. As a result, brokers can now no longer advertise commissions through the multiple listing service. Agents are now also required to sign upfront agreements with buyers, and buyers are responsible for the commission if the seller fails to pay it.

“Now the buyer gets a contract that spells out exactly what will happen — what services will be offered and what commission will be expected from that agent,” said Jennifer Stevenson, regional vice president of the National Association of Realtors.

When asked how she responds to home sellers who believe they may not need a real estate agent in a competitive market, she replied: “I hear that. However, the best thing you can do for your house is to put it on the largest platform possible and shout it from the roof – wherever you are. what advantages your house has and what the price is. You have to price it in line with the market.”

Even if you sold a home in the last decade, you may still receive money from this agreement. Click here to learn more about settling and making a claim.