“How New Rules Will Impact Real Estate Agent Commissions”

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In This Article:

• The Seller’s Agent Has Historically Paid the Buyer’s Agent
• Real Estate Listings and Commissions May Change Soon
• What Might Happen in the Future?
• Do You Need a Real Estate Agent to Buy a House?

The Seller’s Agent Has Historically Paid the Buyer’s Agent

For many years, homebuyers typically did not have to pay their real estate agent for assistance in finding and purchasing a home. Instead, sellers would pay their agents a commission of around 5% to 6% of the home’s sale price, which the seller’s agent would then split with the buyer’s agent.

This arrangement is set to change due to new rules announced by the National Association of Realtors. While the exact outcomes are still uncertain, here are some key points to consider.

Real Estate Listings and Commissions May Change Soon

On March 15, 2024, the National Association of Realtors (NAR) proposed significant rule changes to settle lawsuits over real estate commissions. These changes, pending court approval, are expected to take effect in mid-July 2024. The proposed changes include:

• Buyers’ commissions will no longer be listed on the MLS.
• Buyers’ agents will need a signed buyer representation agreement with the homebuyer.

These changes could significantly impact who pays the buyer’s agent and how much they are compensated, potentially affecting home sale prices.

What Might Happen in the Future?

Although the new rules do not prevent the seller’s agent from sharing their commission with the buyer’s agent, this will need to be negotiated outside the MLS. This could lead to a situation where both the seller and buyer pay their respective agents.

Homebuyers might encounter various fee structures:

• Percentage of the sale price: Buyers might pay a percentage of the sale price or negotiate a commission that aligns with their goal of paying a lower price.
• Flat fee: Buyers pay a fixed amount for the agent’s services.
• A la carte fees: Buyers pay for specific services, such as viewing homes, preparing offers, or assistance with closing.
• Seller concessions: Sellers might offer to cover some or all of the buyer’s agent’s fee as a concession.

The impact of these changes on the cost of buying a home remains uncertain. Fee negotiations could lead to lower commissions and home prices. A February 2024 report from the Federal Reserve Bank of Richmond suggested that a la carte pricing could save homebuyers over $30 billion annually. However, critics argue that buyers might need extra cash for their agent, making it harder for first-time, low-income, and underrepresented buyers to purchase a home.

Do You Need a Real Estate Agent to Buy a House?

While you don’t necessarily need a real estate agent to buy a home, most buyers still prefer to use one. According to the NAR’s 2023 Profile of Home Buyers and Sellers, about 89% of buyers used an agent. An agent can help you find a home, understand the process, and negotiate the price and offer.

If you choose to work with an agent, consider asking about their process, experience, and compensation.

Preparing to Buy a Home

Finding an agent is just one part of the homebuying process. You also need to prepare for other upfront closing costs and the ongoing monthly cost of having a mortgage. Your credit history and scores can significantly impact your mortgage options and costs. Check your Experian credit report for free and learn about steps you can take to improve your credit before buying a home.

At O1ne Mortgage, we are here to assist you with all your mortgage needs. Call us at 213-732-3074 to speak with one of our expert loan officers today!

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