Changes to realtor commissions taking effect this weekend could give home sellers a lot more negotiating power — and for buyers, potentially some more paperwork.
Starting Saturday, realtors will be barred from offering compensation on multiple listing services (MLS), making it harder for buyers’ agents and sellers’ agents to negotiate fees on their own, as they’ve done for decades.
Until now, home sellers traditionally had to pay commissions, commonly in the range of 5% to 6%, to their agents, who then split that fee with the buyer’s agent upon making a sale. The new rules, which follow a historic $418 million settlement with the National Association of Realtors in March, leave more room for sellers to negotiate those fees down and make it more appealing for buyers to forgo agents entirely.
“It’s the biggest change probably in the history of real estate,” said Mike McCann, a realtor in Philadelphia. “It has created a lot of fear, a lot of anxiety” within the industry, he said.
With the MLS no longer serving as a forum for negotiation, it remains to be seen how agents, buyers and sellers will choose to cover commission costs. While sellers could pass on any savings on the commission to the buyer in the form of a lower home price, it’s also possible that sellers could increasingly choose to ask the buyer to cover some or even all of the costs.
When there’s more people who want to buy homes than there are homes for sale, the power dynamic is still in favor of the sellers. Sounds like this could potentially favor more experienced buyers/hedge funds over first-time home buyers. If sellers don’t want to cover fees for buyer’s agent, then that’s more a first time buyer would have to pay upfront.
This is all about shady buyers realtors aiming their customers at homes that have higher commissions instead of what’s the best fit for their customer.