Soooo many home buyers and home sellers have been asking me about the real estate commission changes in 2024. It’s huge news. The media is having a field day, and its news that every prospective or current homeowner SHOULD be aware of.

There’s a lot of legal considerations with these big changes, but today I’ll be addressing several issues including: “What happened?”, “What’s new?”, implications for buyers and sellers, and try to determine if the outcomes of the commission changes are GOOD for you as a consumer that may consider buying or selling a home.

It’s important to know that I am NOT an attorney. I DO NOT provide legal advice. I have no legal training whatsoever.  I’m just a regular dude, a local Realtor® here in Central Florida where my team and I are paid commissions by helping our customers buy and sell homes.  We’ve been helping buyers and sellers for many years and have a long, established record of happy customers.

Why am I addressing this issue?

As many of you know, I try to avoid taking a stance on topics that could be considered political or divisive. This topic is one that has exposed some polarizing viewpoints. The problem is that our buyers and sellers have been asking a LOT of questions, GOOD questions. As these changes have been implemented, I’ve been concerned that consumers may not be able to find accurate information regarding what has actually transpired.

I try to provide local information and opinions about the Central Florida area and our real estate market, so I questioned if this this really necessary? After a lot of thought and prayer, I decided that you needed to know what was going on from a local Realtor’s perspective.

What happened?

According to a magazine on the National Association of Realtors’ website, the National Association of Realtors and the largest industry brokerages (the ones with the deepest pockets) were accused of violating antitrust laws and were found guilty by a jury. The plaintiffs alleged that real estate commissions are too high and that Realtor® practices artificially inflated commissions.

Maybe I got it all wrong, but my understanding is that a few people got together after selling their homes, I believe in Missouri, and were upset that they had to pay the buyer’s Realtor® when they sold their homes. So, they went and hired a high-powered attorney that set out to make a bundle of dough, and he did. I think the attorney made something like 256 MILLION dollars.

What’s new?

The big result of all these real estate commission changes in 2024 is that commissions for a buyer’s agent, the one showing the home, advising, and negotiating on the buyer’s behalf is no longer noted on the Multiple Listing Service. It used to be that a home seller was required to pay at least one dollar to have their home on the MLS. Now it’s zero dollars. I know…It’s silly, but here’s the big part.

Additionally, EVERY buyer that wants to tour a home with a Buyer’s Agent MUST sign a document, a contract if you will. This contract outlines that commissions are negotiable, as they have always been. It goes on to note that if the seller is not offering a commission for a Buyer’s Agent to procure a buyer, that the BUYER will be responsible for paying the Buyer’s Agent’s negotiated commission.

I said earlier that I receive commissions from the sale of homes. I also said I’m a Realtor® and the trade association that I work for, and its Realtors®, were found guilty.  So, I should be angry about this lawsuit, right? Absolutely not. Those of you that know me, know that I’m all about consumer advocacy, capitalism, and the free market. I’m also 100% in favor of the free market’s invisible hand.

Do I think it’s silly? Absolutely! I believe it’s a whole lot of talk about a minor procedural change where the attorneys are the big winners. Now perhaps in other areas or states artificially inflating commissions HAS occurred, but I’ve never seen a single instance in my eleven-year career of it happening here in Central Florida.

Are there questionable characters in the real estate market? Yes! I’ve met a few of them, but they’re surely the minority and although I may think their ethics were questionable, were they conspiring to artificially inflate commissions? No. Not at all.

Implications for buyers and sellers

If you’re thinking of selling a home, your first thought might be that you’ve hit the jackpot if you don’t have to pay a buyer’s Realtor®, but many sellers that I’ve been working with have told me that they DO want to pay for a buyer’s Realtor®.

They believe that they’ll get a higher NET sales price if more Realtors® bring more buyers to see their home. They’ve noted that they’re worried that they’ll have less qualified buyers because if a buyer has to pay their Realtor® they’ll have less funds available to qualify to purchase their home.

A few sellers have noted that they’re concerned that buyers won’t make an offer on their home if those buyers have to pay their Realtors commissions to work for them. These sellers voiced concerns that buyers will move on to homes that offer Buyer’s Agent commissions. I can’t really say if any of this will happen as it’s my intention here just to report what I’ve heard from my customers.

Are these changes good for the consumer? I don’t know. It’s possible, but I’d say it’s questionable if you’re a first-time homebuyer, or for that matter any buyer without an abundance of discretionary cash laying around to be able to afford the purchase of a home. This group of consumers may not be able to afford to pay a Realtor® to advocate on their behalf along with closing costs and other purchase expenses. If you’re a loaded buyer, and money isn’t an issue at all, then it may have no impact at all.

As before, prospective buyers could go straight to the Listing Realtor®, who is paid by the seller, and try to negotiate by themselves to avoid having to pay a buyer’s Realtor® commissions. If you’re a master negotiator and very familiar with the forms and how the process works, then going straight to the listing Realtor® could be a wise move.

If you’re a home seller, then on the surface, NOT paying a Buyer’s Agent could be a financial windfall if you aren’t like one of those sellers I spoke of a minute or so ago.  In light of what I’ve been hearing from my customers, I think it’s really too early to tell if these real estate commission  changes are actually good for the consumer.

At this point, I think the only real winners are the attorneys; however, the free market will ultimately determine if these changes are good for the consumer. If lower-income bracket buyers can compete, and commissions DO fall, then yes, it could end up being a good change for the consumer, but it may be a few years, maybe a decade, before we’ll know if these changes are good as a whole. If you have any questions about this, or anything to do with the real estate market, please feel free to give me a call.

Published on November 12. 2024 / no comments.