The process of buying a home has seemingly never been simpler: Find a property on a listings website like Zillow, Redfin or Trulia; reach out to the listing agent; tour the property; and make an offer.<\/p>\n
But for years behind the scenes, experts say, consumers have not been fully aware of the ultimate cost \u2014 and potential conflicts of interest \u2014 when searching for a home.<\/p>\n
Now, a landmark settlement with the National Association of Realtors is poised to upend this model. According to consumer advocates, and even some realtors, it\u2019s a win for homebuyers and sellers.<\/p>\n
\u201cPrice transparency is a good thing, increased competition is a good thing, and this will increase both,\u201d said Mariya Letdin, an associate professor at Florida State University\u2019s College of Business. \u201cI really welcome this change.\u201d<\/p>\n
When someone goes looking for a home today, they are in most cases intercepted by a broker who has access to certain listings and who will work with the buyer at no cost upfront to help them get into a home.<\/p>\n
But therein lies a common misconception, experts interviewed by NBC News said. Although a homeowner who puts their property up for sale must hire professionals to market their home, they usually fold that cost into the final price paid by the buyer.<\/p>\n
\u201cThe buyer brings the entire purchase price to the table,\u201d Letdin said. \u201cAnd the seller gets to keep a little bit more of that after this ruling.\u201d<\/p>\n
As part of the new settlement, the buyer should now be fully apprised upfront about any potential fees or commissions they\u2019ll ultimately have to pay.<\/p>\n
That\u2019s because the agreement requires that a buyer sign a formal contract with a broker laying out what services they\u2019ll be receiving, and for how much.<\/p>\n
Alternatively, a homebuyer could decide not to hire a broker and instead put their search costs toward a real estate lawyer, appraiser or someone else with knowledge of the housing market, experts say.<\/p>\n
And a seller could even offer to cover the cost of the buyer\u2019s team as an incentive to attract more buyers.<\/p>\n
Of course, for a property that\u2019s garnering a lot of attention, such buyer incentives are unlikely to be on the table.<\/p>\n
And in the months following Covid-19 pandemic reopenings, the hottest U.S. real estate markets were tipped squarely in favor of sellers.<\/p>\n
But now, with home price growth leveling off, the playing field is leveling out too, putting more buyers in the driver\u2019s seat, experts say.<\/p>\n
\u201cNow you can hire an attorney for $1,500, instead of paying a $50,000 commission,\u201d said Doug Miller, a real estate lawyer based in Minnesota who helped launch the actions that led to the NAR settlement.<\/p>\n
Whomever a prospective buyer chooses as their representative in the homebuying process, the NAR settlement now formally bans the seller\u2019s ability to advertise a commission for the buyer\u2019s reps on the multiple listing service.<\/p>\n
For its part, the NAR has maintained that the free market has always set commission levels, and that they were always negotiable \u2014 and even useful.<\/p>\n
\u201cOffers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers,\u201d the NAR said in its March 15 statement announcing the agreement.<\/p>\n
But in most cases, there was little difference in the amount being offered for those commissions in a given market \u2014 usually about 3%. <\/p>\n
That\u2019s because any attempt to offer a lower commission to a buyer\u2019s agent would likely motivate the agent to direct their client away from that property.<\/p>\n
Miller characterized that behavior as improper and said buyers, in many cases, would have had no awareness of it.<\/p>\n
\u201cThe future here is that buyers will now be in the driver\u2019s seat,\u201d Miller said. \u201cInstead of that [commission] money going to their agent \u2026 it can now go directly to the buyer. It\u2019s the same amount of money, but now the buyer gets money instead of a buyer agent, and they can decide what to do with it.\u201d<\/p>\n
What\u2019s more, greater competition for clients is likely to result in lower costs across the board, said Ryan Tomasello, a real estate industry analyst with the Keefe, Bruyette & Woods financial firm.<\/p>\n
\u201cWhen you introduce a ton of transparency to a marketplace that has historically lacked it, any economist will tell you that reduces friction costs \u2014 i.e., commissions \u2014\u00a0and those are some of the highest in the world,\u201d Tomasello said. \u201cSo the all-in cost of buying and selling a home, in theory, is going to decline.\u201d<\/p>\n
Many experts, including other real estate professionals, agree that the settlement will effectively thin the ranks of fly-by-night agents who served as an intermediary \u2014 a phenomenon that surged during the pandemic-era housing boom.<\/p>\n
\u201cA lot of folks parachuted in during 2020-2021 to try to make easy extra money by putting themselves out there as a buyer agent and taking 3%,\u201d said Phil Crescenzo Jr.,\u00a0vice president of the Southeast division at\u00a0Nation One Mortgage Corp. <\/p>\n
\u201cBut they weren\u2019t bringing 3% of value \u2014 not even close.\u201d<\/p>\n
Crescenzo compared it to moonlighting mortgage brokers who helped fuel the housing bubble of the mid-to-late 2000s.<\/p>\n
\u201cOnce they changed the compensation rules, the dominant professionals rose to the top, the bottom disappeared, and the industry got better,\u201d Crescenzo said.<\/p>\n<\/p>\n
The process of buying a home has seemingly never been simpler: Find a property on a listings website like Zillow, Redfin or Trulia; reach out to the listing agent; tour the property; and make an offer. But for years behind the scenes, experts say, consumers have not been fully aware of the ultimate cost \u2014 […]<\/p>\n","protected":false},"author":0,"featured_media":2425,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=2424"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2424\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/2425"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=2424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=2424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=2424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}