Real estate commission changes could be changing

Sellers were sued over having to pay the buyer agent commission. Now buyers will have to save more to buy a home.

TAMPA, Fla. — The real estate market is about to get even better if you’re selling. The custom of paying the buyer’s agent commission will likely go away because of new changes announced Friday by a powerful real estate trade association. The National Association of Realtors has agreed to pay $418 million and change its rules to settle lawsuits claiming homeowners have been unfairly forced to pay artificially inflated agent commissions when they sold their homes. 

Under the terms of the settlement announced Friday, the NAR agreed to change rules that for decades required brokers or agents who list a home for sale on the trade groups affiliated Multiple Listing Services to offer compensation up front to agents representing potential homebuyers. Last fall, a federal jury hearing a lawsuit brought by home sellers ordered the NAR and other defendants to pay almost $1.8 billion in damages.

“Regardless of what’s been said in these lawsuits, every time I go to a listing appointment, the commission is negotiable,” said Tampa real estate broker Michael Palermo. 

Palermo has been in Tampa real estate for decades and doesn’t expect too much impact to him personally or to his agents.

“If they’re knowledgeable, if they know the process and they can demonstrate that knowledge and how they’re going to work for their client, they shouldn’t have a problem,” he said.

Decoupling each agent commission will make the seller paying the buying agents commission, usually 2 or 3 percent, less common. 3 percent of an average home sale is 10 to 15 thousand dollars. Sellers won’t have to take that out of their proceeds, but it could lower their home price.

“This will make it more difficult for first time home buyers,” said Dr. Lei Wedge, associate professor at the USF Kate Tiedemann School of Business and Finance.

If the change happens, it’ll become standard practice in Florida for buyers to sign formal agreements with agents to help them find a home in exchange for upfront fees or deposits, on top of the tens of thousands of dollars they need already to get a mortgage. 

“If you’re younger, you don’t have enough savings, now that’s additional cost that you need to come out of your pocket for you to be able to afford a home,” she said.

The proposal still needs a judge to approve it. Now while established agents like Palermo will be able to adjust, part-time realtors and those who struggle to find listings may have to be more aggressive in courting buyers.


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