The dynamic between buyers, sellers, and agents has seen significant changes over the years due to technological advancements and legal reforms. Recent developments within the National Association of Realtors (NAR) regarding commissions have addressed longstanding concerns surrounding the compensation of buyer’s agents.
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The Role of Agents
In the past, real estate agents acted as gatekeepers of property information, but the internet has empowered buyers to discover new listings, assess the suitability of the properties, and even schedule home tours independently. While information has become easier to access, buyer’s agents still play a crucial role in helping potential homebuyers consider their options before making an offer.
Historically, home sellers bore the cost of commissions for both seller’s and buyer’s agents, typically calculated as a percentage of the sales price. Although real estate commissions have always been negotiable, questions arose about the alignment of value agents provide with the costs associated with their services. While it’s illegal for a buyer’s agent to steer their client toward a higher paying home, it was suggested in multiple cases that this can happen.
Legal Reforms
The lawsuits and scrutiny from regulatory bodies like the Department of Justice sparked re-evaluation of commission structures. The DOJ suggested that current practices unfairly elevate the cost of buying a home and may put pressure on sellers to maintain the high commission rates. As part of the settlement, when agents go to list homes on the Multiple Listing Services (MLS), they’ll no longer be able to list the commission owed to the buyer’s agent.
Beginning August 2024, the MLS field which advertises buyer’s agent compensation will go away. Buyers will be required to have a written agreement with their agent, clearly outlining the fees.
Implications for Buyers and Sellers
Overall, the new ruling is expected to make commissions more transparent and competitive, potentially even lowering them. We could see agents offering flat fees, hourly charges, etc. instead of charging a percentage of the sale price. Buyers will need to negotiate commissions with their agent. While they may no longer be able to rely on the sellers to pay their agent’s commission, the question of who will pay for it and how much will be paid by each party could become a part of the home offer to the seller.
As the real estate landscape continues to evolve, it’s important for buyers and sellers to understand changes and how they are affected by them. Delaney Besecker of FBC Mortgage underscores the value of professional representation for both buyers and sellers: “Buying a home is an extremely detailed and complex process. Remember that you get what you pay for! It is my experience that buyers AND sellers who elect to work without representation experience more stress, frustration, and delays in both the home buying and selling process that individuals with representation generally don’t experience.”
Understanding changes to the home market is an important part of homeownership. Keep up with the latest mortgage news on our blog. Working with experienced real estate and mortgage professionals can help provide you peace of mind and guidance through your homebuying process. Ready to take the next step? Contact one of our Loan Officers today.
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Why Choose FBC Mortgage?
FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are always available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.
Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.
All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2024.
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