Real estate agents, homebuyers and home sellers will see some changes soon in how homes are bought and sold.
A proposed settlement between the National Association of Realtors and home sellers regarding commission fees, if approved, is expected to impact both consumers and real estate agents as it changes the ways homes are bought and sold.
“The proposed settlement agreement the National Association of Realtors is pursuing is a pivotal moment for our industry,” said Blake Barry, a Realtor at Williams Trew and current president of the Greater Fort Worth Association of Realtors.
Russ Anderson, president and CEO of Briggs Freeman Sotheby’s International Realty, agreed.
“I do believe this is a watershed moment for our industry,” he said.
Under the proposed agreement, the National Association of Realtors will pay $418 million to resolve claims in four antitrust class action suits that alleged the association and several of the country’s largest residential real estate brokerages artificially inflated home prices via broker commissions.
The settlement with the association is in addition to $209 million in settlements reached earlier with other defendants, brokerages Anywhere Real Estate, RE/MAX and Keller Williams. There are some real estate brokerages who have yet to settle the suit.
The association also agreed, starting in mid-July, to allow sellers to negotiate the rates they pay to real estate brokers. Sellers have typically paid a 5% to 6% commission that agents for the buyer and seller split.
Many analysts and industry officials expect the changes to result in less compensation for real estate agents per transaction and potentially lower the cost of homes.
Anderson said he expects it will take some time for the changes to work their way through the system of buying and selling a home.
“We spent Monday mostly telling our agents to stay calm because there were some extreme headlines out there,” he said. “We told our agents we’re going to work our way through this, and that’s what we’ll do.”
Anderson believes agents will need to be more transparent about the process and to demonstrate the value they are offering to the seller.
“That’s a conversation they haven’t necessarily had to have and now they will,” he said.
Sriram Villupuram, an associate professor of finance and real estate at the University of Texas at Arlington, said that, while the changes might lower home prices in North Texas, that impact will be minimal.
“Interest rates and housing stock are much more important factors in this,” he said. “Everyone wants to move to Dallas-Fort Worth. We need more housing, simple as that.”
Villupuram believes the agreement could increase mobility, which would be a good thing for the area.
“If someone wants to move for a job in another area, being able to negotiate a lower commission might be enough to get them to move, to make that change,” he said. “That might motivate people to move, whereas now they are tied to a 5% or 6% commission rate.”
The changes will likely pressure some agents and maybe even some brokerages to leave the industry, Anderson said.
“There are some agents out there who sell one or two homes a year,” he said. “They probably can’t get by with that now.”
Villupuram said other countries buy and sell houses without the standard commission fees that have been part of the process in the United States for decades.
“These other countries buy and sell homes all the time and they make it work,” he said. “I’m sure we will too.”
Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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