The real estate industry is seeing the biggest shift it has seen in years, in fact, some believe it is the most monumental shakeup ever for the business.
At issue is the industry standard practice of seller’s agents offering the buyer’s agents commissions on the Multiple Listing Service, the database through which most home buying and selling takes place. Historically, the seller’s agent would offer a buyer’s agent 2.5%-3% commission on a sale. Much of what will be changing in the process of buying and selling a house is uncertain because the pending lawsuit has yet to be certified in federal court. Any new regulations won’t be in effect until July, but clients are already negotiating new terms with their agents.
The terms of the settlement may now allow the seller’s agent to avoid paying out the buyer’s agent, meaning that duty could become the responsibility of the homebuyer.
Economists estimate the savings from the new commission structure could be around 30% for sellers, meaning list prices could fall. Since the sellers will be spending less of their sales price on commission, they may be more incentivized to sell their homes, which could be a boon to low-inventory markets like the Bay Area. With more homes on the market, it could become slightly less competitive, and prices should drop – even if slightly. All of these changes may take time before being reflected in the market, and some agents are doubtful that we will see big price drops in the Bay Area, but that may not be the case in other areas of California. Stay tuned.
