How the Process of Selling a Home May Chnage
The National Association of Realtors has agreed to change its policies to settle several lawsuits brought by home sellers — a move that could reduce commissions.
A settlement reached this week threatens to strike a blow to an established standard of residential real estate: the 6 percent sales commission. It also will change who pays it. The deal, reached after a yearslong court battle initially brought by a group of home sellers in Missouri, calls for the powerful National Association of Realtors, which has long regulated the way U.S. homes are sold, to amend its rules on how Realtors for sellers and buyers are compensated.
In most real estate transactions in the United States, both the seller and buyer have an agent representing them. For decades, there’s been a standard for paying these agents: a commission of between 5 and 6 percent of the home’s sale price, covered by the seller and split between the two agents.
https://www.nytimes.com/2024/03/16/realestate/buy-sell-house...
The NYT stated the following:
Home prices are slated to drop. That’s because the sticker price will no longer come with steep commissions that are typically automatically accounted for...
IMHO, this makes no sense. I think the exact opposite is true. Wouldn't an agent want to price the home higher so they can continue to make the most money from a lower commission?
If they were getting 6%, and this will not be the standard moving forward, why lower the price of the house only to make less money? And please don't give me the line about "service."
First, there has never been a "standard" commission. NAR has always said commissions are negotiable.
Second, commissions are set at approximately 5-6% because that's what it takes for an agent to earn a living. The top 10% of agents earn around $110,000 a year. That's the TOP 10%. The average agent works 30-50 hours and earns less than $45,000 a year.
Reduce commissions and agents will go back to W-2 jobs, which is what 87% of all agents do already.
