What Were Terms of Settlement?

You’ve probably heard the news that there are changes coming in terms of how real estate commissions are paid. The National Association of Realtors, in response to a lawsuit brought by sellers, reached a settlement:

• Sellers and their agents won’t be allowed to offer a commission to buyers’ agents within their listing.
• However, that doesn’t mean that a seller isn’t allowed to pay buyers’ agents a commission. It just can’t be published in the listing.
• And buyers will now be required to sign a written agreement with an agent in order to work with them, which will likely require them to agree to a certain amount of compensation. That doesn’t necessarily mean the compensation has to be paid out of the buyers’ pocket; it could be an agreed upon amount that will be negotiated into the purchase price paid for through the proceeds of the sale.

How Did News Headlines Mislead Buyers?

This might sound exciting and like a potential game-changer for you as a home seller or buyer, with headlines proclaiming things like:

• “Real estate commissions are being slashed!”
• “Selling your house will now be less expensive!”
• “No more paying 6% to real estate agents!”

But nobody knows exactly how things are going to play out. Any claims that the media makes that commissions will be cut in half, or any specific number of dollars will be saved by consumers, remains to be seen. The changes might reduce commissions. On the other hand, they could increase them. As with many things the government or court system touches, there’s always the possibility that it could create more issues than it solves.

Basically, it allows sellers to choose to not offer or agree to pay a commission to buyers’ agents when they list their house for sale, and allows buyers to choose to not work with a buyers’ agent when they buy, in hopes of saving money. But before you do that, there are some things you should keep in mind.