NAR settlement could change the way you buy or sell your home
WICHITA, Kan. (KSNW) – The way you buy or sell a home could change after a class-action lawsuit involving the National Association of Realtors. The organization will pay $418 million to home sellers to make reparations.
At issue is how brokers or agents receive and communicate their commissions. Some people did not realize they could negotiate that rate locking them into higher fees.
A local expert and a broker both say there are still plenty of questions to be answered, but buyers could be responsible for paying agent fees out of pocket.
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Dr. Stan Longhofer is the director of the Wichita State University Center for Real Estate. He says this doesn’t necessarily mean that commission rates for agents would fall.
“I actually think it’s going to end up being a negative thing in the short run for realtors and for prospective home buyers and home sellers,” Longhofer said.
Longhofer says that typically, both the buyer and the seller’s agent are paid out of the proceeds of the sale, usually around five to six percent.
“The advantage for you as a buyer is you don’t have to come up with the money out of pocket in order to pay your real estate agent,” Longhofer said.
Many agents used to post their commission on the Multiple Listing Services (MLS) where properties are listed. But this settlement, which still has to be approved by a judge, says agents can’t list how much they’re willing to pay of the buyer’s agents costs. While it can still be an option, Longhofer is concerned that it could make the process less transparent, leaving some buyers to foot the agent bill out of pocket.
“So what this will do is one, it will make it much more difficult, less clear to understand how buyer agents are going to be compensated, potentially making it less transparent to consumers and therefore hurtful to consumers,” Longhofer said.
Todd Woodburn has been in real estate for decades.
“I don’t think that we’ll see a large loss in membership as far as active agents,” Coldwell Banker supervising broker and vice president of Kansas Todd Woodburn said.
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Woodburn does believe real estate agents need to do a better job of communicating their value to buyers and sellers.
“I think we’ll see brokerages stepping up and doing a better job of serving the consumers and making the consumers aware of our business,” Woodburn said.
The bottom line is that if you’re planning to buy or sell a home, make sure you know you can negotiate the commission rate and ask who is paying it so you aren’t surprised by expenses when the sale is final.
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