A federal lawsuit has forced changes to the way consumers negotiate and pay real estate agents. In October 2023, a federal jury in Missouri found that the National Association of Realtors (NAR), along with several large brokerages, conspired to inflate Realtors’ commissions. Many of those brokerages settled out-of-court along the way — and on March 15, 2024, NAR settled as well, agreeing to pay $418 million in damages and change some of their long standing rules. Here’s what it means for homebuyers and sellers.
Starting in July 2024 (pending federal court approval), home sellers no longer will be responsible for paying both their own agent and the buyer’s agent. Instead, homebuyers who want representation will have to pay their own agents separately.
There are still many details to be worked out. If the buy-side agent no longer is paid from the listing commission, then that means the buyer is responsible for paying their agent directly — a sum that would average about $10,000. For now, buyers aren’t allowed to roll that amount into their mortgage, although it’s possible that the Federal Housing Finance Agency will change its rules to allow Fannie Mae and Freddie Mac mortgages to include commissions. Industry experts expect federal regulators to tackle that topic soon.
This is not a good thing for buyers. Especially the first-time buyers or any buyer without additional funds to pay an agent. I expect that there will be a new style of commission that will be shared by the sellers and buyers allowing the proceeds to come from the seller’s side.
Feel free to call me at 503-7013-4699 or email me at sbfreedom@gmail.com if you have any questions.
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