$418,000,000 [Proposed] Realtor Settlement

by Mar 19, 2024Uncategorized

You may have heard of a significant proposed settlement in the real estate realm. Many media outlets headlines are designed for clicks, lacking depth on the settlement’s true details. Here is a brief email describing what has changed, what didn’t, my reservations, and implications for you.

What changed:
Starting in mid-July, sellers’ agents can No longer offer buyers agent’s compensation through the MLS listing services system.
Buyers working with a buyer’s agent, must sign a buyer representation contract (similar to a listing contract for listing agent), in order to use their services.
Home Buyers may POTENTIALLY start paying for buyer agent representation.

Unchanged: Currently part of the Listing agent’s commission is used to compensate the buyer’s agent for bringing a well-qualified buyer to the table. This Will remain. Sellers can still opt to compensate buyer’s agent; it just needs to be via off-mls negotiations.

My Concerns: Media outlets (CNN and New York Times as examples) are claiming this will reduce home buyer costs and bring down housing prices, because “realtor commissions have inflated the housing market for years”. I disagree for a couple reasons:

-Home prices are determined by supply + demand, as well as comparable sales; not by the commissions paid to sell those homes.
-If buyers pay their own agent, that would increase their home buying costs.
-If home buyers chose to not use an agent, and go directly to the listing agent, their costs may increase by overpaying for a property, not negotiating for inspection items or appraisal shortfalls properly, etc.
-This change will disadvantage buyers more than benefit sellers, in my opinion.

Positive Perspective: Personally, I embrace these changes!
-For seller clients it adds a level of strategy to our marketing approach on how we can stand out from other listings + attract more Quality buyers.
-For buyer clients, we continue to provide tremendous value in a hyper-competitive market. It is difficult to purchase a home in what is “the hottest market in the country” according to Housingwire.com [ Boston is #1 ]. However, I am confident our buyer services which combine historical analytics, local market knowledge, human psychology and realtor relationships will get the job done.

Sad Developments: First time home buyers, with low down payments will get hurt, because they may not be able to afford buyer representation (if a seller is not offering buyer agent compensation), and they truly need someone guiding them through the process. Secondly, a lot of part-time realtors, and those who are not professionals, may exit the business, due to a flock towards high caliber.

**Disclaimer, these are my opinions! If you have any questions or comments, please reach out for a more detailed conversation.