How will new realtor commission rules affect the homebuying process?
Posted On October 1, 2024
There are new rules for realtors’ commissions when you’re looking to buy a house. How will they affect you?
Our guest in a recent episode of “What’s Working with Cam Marston” had the answer. Alabama Gulf Coast realtor Angelo DePaola, the Coastal Connection, has done a lot of work researching how the new rule will affect realtors and homebuyers.
Once upon a time, if you wanted to buy a house you went to the realtor who listed that house – the seller’s agent. But in order to ensure that the best interests of the buyer were represented, buyer’s agents became a thing.
The National Association of Realtors came up with a commission-sharing model in the 1990s so that both agents got paid out of the listing agent’s commission. But after a lawsuit alleged this model essentially inflated the costs of real estate, the rules have recently been changed.
“The problem is there was no transparency in the real estate industry,” DePaola said. “Buyer’s agents were like: ‘Let me come work for you. I work for free.’ Because they knew they were going to get compensated from the listing agent’s side. … They felt like that was a barrier of entry, artificially raising the pricing of houses.”
Under the new rule resulting from the lawsuit settlement, buyers will pay a fee for their agent just like sellers do for the listing agent. “I can’t even show you a house until we have that buyer-agency agreement signed,” DePaola said.
The irony, DePaola says, is that the settlement may make it tougher for some buyers to purchase a home. “For most Americans, the barrier to entry is the upfront costs,” he said. “Those people are the ones who are going to get squeezed on this deal.”
The specific way in which buyer’s agents will receive their commission – and how that will affect the decisions homebuyers have to make in signing on the dotted line – is still a bit up in the air. It could result in a negotiation between the buyer and agent over a fee.
And that, DePaola says, could make it harder for people who sell real estate as a side gig. “I think those people are going to have a very hard time explaining their value,” he said.