A groundbreaking antitrust ruling against the National Association of Realtors (NAR) last year is poised to revolutionize how Americans buy and sell homes. Following a $418 million settlement with homebuyers, the NAR’s grip on the housing market is expected to loosen, potentially leading to a significant drop in homebuying costs.
One of the most significant changes is the expected demise of the standard 6% commission split between the buyer’s and seller’s brokers. Critics argue that these fees, which have been the norm for decades, have artificially inflated housing prices. With the new rules, agent commissions are anticipated to become competitive and negotiable, allowing sellers to seek better rates. Additionally, certain anticompetitive practices, such as rules dictating compensation for buyers’ agents, will be prohibited.
While these changes are expected to lower the overall cost of buying a home, there are some caveats. Buyers may now have to pay their brokers directly, a departure from financing the commission as part of their mortgage. This shift could be challenging for buyers accustomed to the previous system. Some buyers might even opt to forgo using a broker altogether, further reshaping the industry.
The settlement is also expected to shake up the brokerage industry. Real estate commissions are predicted to fall by as much as 50% due to the new competitive landscape. Buyers may need to adjust to paying their agents in different ways, potentially through flat fees or other arrangements.
The NAR’s requirement for sellers’ brokers to advertise the commission they will pay brokers’ agents, a rule that critics claim has led to higher commissions and pushed buyers toward more expensive homes, will be eliminated. This change is expected to increase transparency in the homebuying process.
Overall, experts anticipate that buying a home will become more affordable. For the median-priced American home, sellers currently pay over $23,000 in brokerage fees, which could drop by $6,000 to $12,000 once the settlement is finalized. This could result in substantial savings for homebuyers, potentially reaching billions of dollars annually.
However, the new reality could be challenging for brokers, especially those who do not frequently sell homes. With home purchases at a nearly 30-year low and supply shortages and rising prices persisting, falling commissions could lead to a significant number of brokers leaving the industry.
In conclusion, the settlement between homebuyers and the NAR is set to bring about profound changes in the American real estate market. While buyers stand to benefit from lower costs, the industry may undergo a period of adjustment as brokers adapt to the new competitive landscape.
(Source: NBC | CNN | NYT)
