Starting in mid-July, when homebuyers go to tour a house that’s posted on a multiple listing service (MLS), they’ll have an extra bit of paperwork to sign: an agreement with their real estate agent. It will be a chance for buyers to negotiate with those agents over what services the agent will provide and how much they’ll bꦿe paid.༺ 

That document could signal a major shift in the way Americans buy and sell homes. It was mandated as part of a settlement ending a 澳洲幸运5官方开奖结果体彩网:class action lawsuit by home sellers against the National Association of Realtors (NAR). In addition to requiring buyer’s agent agreements, the settlement removes a section of MLS listings displaying a percentage commission of the sale to buyer’s agents.

This seemingly small change could have a big impact on what real estate agents do and how much they’re paid for it, and may lower the fees charged to buyers and sellers in the homebuying process, exp✃erts say. 

“I think that will make the industry more competitive,” said Sophia Gilbukh, a professor of real estate at City University of New York. “The prices are going to be lower, but also there are going to be fewer people who are just kind of lingering around [real es🌺tate sales], who have their license in hopes of maybe making one deal a year, people who have no experience and who are not really helpful for the clients anyway.”

Little Change in Commissions Seen in Near Term

Currently, when a house is sold, the seller’s agent typically gets a 5% to 6% commission on the sale price and splits that with the agent representing the buyer. While there’s no rule dictating how much the buyer’s agent will get—or whether they’ll be offered anything at all—澳洲幸运5官方开奖结果体彩网:home sellers have a strong incentive to offer the standard split, or else agents could simply not show their clie꧅nts those houses.

Indeed, houses that offered lower commissions were 5% less likely to sell, and took 12% longer to sell, researchers found in a 2017 paper published in the American Economic Journal. 

The industry may change slowly, if at all, with agents negotiating the same split as before, just through means other than🐟 the MLS. 

“We believe the 5% commission rate is viewed as standard by sellers, which is l🔯ikely to keep commission rates largely unchanged near-term,” analysts at Jefferieཧs Equity Research wrote in a note immediately after the settlement was announced last month.

”We were also unable to find evidence that today's settlement precludes brokerages from providing unilateral offers of compensation off the MLS. In other words, there appears to be some ambiguity that could allow communication of buyer agent compensation on other channels like brokers’ website.”

Room for Negotiations on Service Costs

Gilbukh believes the settlement will create more opportunities for clients and 澳洲幸运5官方开奖结果体彩网:real estate agents alike to change the way thing♒s are done. For instance, a buyer’s agent might be paid separately for the individual services they offer: showing a house, negotiating a price with sellers,𓃲 or helping with paperwork.

There may also be more room for different kinds of agents to offer services at different rates: A highly experienced agent might ch✃arge the full 2.5% commission, while a rookie could work for a reduced rꦐate for more cost-conscious buyers.

Ultimately, the settlement could spell the end of the standard 6% commission paid to seller’s agents, according to an analysis last week by Ben Harris, director of economic studies at the Brookings Institution, a nonpartisan think tank, together with research assistant Liam Marshall.

Increased competition could force 澳洲幸运5官方开奖结果体彩网:commissions under 2%—similar to levels in countries outside the U.S., they said. That would represent significant savings for buyers and sellers. For example, on a median-♋priced home, a 6% commission💖 would be $23,070, versus just $7,690 for a 2% commission.

“These a♛lternative models and practices will almost certainly mean lower costs of housing transactions, although the magnitude is unclear,” Harris wrote. “Commissions falling to this level would amount to tens of billions in annual windfalls to American households that engage in real estate transactions.”

Possible That Some Buyers Could Suffer

It’s also possible shifting the up-front cost of buyer’s agent fees away from sellers and onto buyers could make housing less affordable, not more, according to David M. Dworkin, CEO of the National Housing Conference, an advocacy group promoting affordable housing. First-time buyers, already confronted with 澳洲幸运5官方开奖结果体彩网:soaring prices and sky-high mortgage rates, may find themselves unable to afford an experienced broker to represent them and just end up not buying a house, Dworkin wrote in a commentary. 

That was also the conclusion of a 2022 research paper by economists Ann Schnare, Amy Crews Cutts, and Vanessa Gail Perry, which found “changing the current compensation structure would suppress homebuying opportunities for large segments of the potential market, and that minorities, lower income households, and 澳洲幸运5官方开奖结果体彩网:first-time home buyers who rely more heavily on agent services would suffer the most.” 

Whatever the overall effect of the settlement endsꦆ up being, it likely won’t take place overnight, experts said. 

“The prices are sticky,” Gilbukh said. “It's going to take a long time potentially for the industry to shake out what's going to happen.”