Get insights on how commission changes impact buyers and sellers.
Let’s get into the topic of recent commission lawsuits and their implications for buyers and sellers. These legal changes are known to make changes in real estate transactions, emphasizing negotiation over standard practices. Understanding these shifts is needed for your next home purchase or making a successful sale.
Understanding the Lawsuits:
- Eliminating Standard Terms. Traditionally, terms like "customary," "standard," and "normal" have been used to describe real estate commissions. However, these terms are now under scrutiny, leading to lawsuits.
- Negotiable Commissions. The lawsuits emphasize that all commissions are negotiable. There's no standard rate, and everything can be discussed and agreed upon between parties.
Changes for Consumers:
- Buyer Representation Agreement. When working with a real estate agent, buyers must now sign a mandatory buyer representation agreement. This agreement outlines the working relationship, duration, specific properties, and the agent’s compensation.
- Who Pays the Commission? Although the seller traditionally pays the buyer’s agent commission, this can now be negotiated. Sellers might choose not to pay, requiring buyers and their agents to reach their own agreements.
Practical Implications:
- Real Estate Transactions. The process of buying a house remains the same—buyers will still have access to property listings online, and agents will continue to show homes and schedule showings.
- Hidden Commissions. The buyer’s agent commission will no longer be displayed on MLS platforms like Redfin and Zillow. This means agents won’t filter homes by commission, focusing solely on finding the best properties for their clients.
"Waiting could lead to higher prices or interest rates, potentially pricing you out."
Long-Term Impact:
- Increased Negotiation. Buyers and sellers will need to negotiate more details in their offers, including agent commissions. For example, an offer might specify a home price and a commission percentage, which can then be negotiated with the seller.
- Consumer Benefits. This shift aims to benefit consumers by ensuring transparency and encouraging agents to focus on finding the best homes rather than the highest commissions.
This change highlights the importance of negotiation in real estate transactions. As a buyer, if you qualify for a mortgage, now might be a good time to buy despite the market flux. Waiting could lead to higher prices or interest rates, potentially pricing you out.
If you have questions or need guidance on these changes, feel free to reach out. Call or text me at (562) 316-2915 or email me at [email protected].
