Share this @internewscast.com

The process of buying a home has seemingly never been simpler: Find a property on a listings website like Zillow, Redfin or Trulia; reach out to the listing agent; tour the property; and make an offer.

But for years behind the scenes, experts say, consumers have not been fully aware of the ultimate cost — and potential conflicts of interest — when searching for a home.

Now, a landmark settlement with the National Association of Realtors is poised to upend this model. According to consumer advocates, and even some realtors, it’s a win for homebuyers and sellers.

“Price transparency is a good thing, increased competition is a good thing, and this will increase both,” said Mariya Letdin, an associate professor at Florida State University’s College of Business. “I really welcome this change.”

When someone goes looking for a home today, they are in most cases intercepted by a broker who has access to certain listings and who will work with the buyer at no cost upfront to help them get into a home.

But therein lies a common misconception, experts interviewed by NBC News said. Although a homeowner who puts their property up for sale must hire professionals to market their home, they usually fold that cost into the final price paid by the buyer.

“The buyer brings the entire purchase price to the table,” Letdin said. “And the seller gets to keep a little bit more of that after this ruling.”

As part of the new settlement, the buyer should now be fully apprised upfront about any potential fees or commissions they’ll ultimately have to pay.

That’s because the agreement requires that a buyer sign a formal contract with a broker laying out what services they’ll be receiving, and for how much.

Alternatively, a homebuyer could decide not to hire a broker and instead put their search costs toward a real estate lawyer, appraiser or someone else with knowledge of the housing market, experts say.

And a seller could even offer to cover the cost of the buyer’s team as an incentive to attract more buyers.

Of course, for a property that’s garnering a lot of attention, such buyer incentives are unlikely to be on the table.

And in the months following Covid-19 pandemic reopenings, the hottest U.S. real estate markets were tipped squarely in favor of sellers.

But now, with home price growth leveling off, the playing field is leveling out too, putting more buyers in the driver’s seat, experts say.

“Now you can hire an attorney for $1,500, instead of paying a $50,000 commission,” said Doug Miller, a real estate lawyer based in Minnesota who helped launch the actions that led to the NAR settlement.

Whomever a prospective buyer chooses as their representative in the homebuying process, the NAR settlement now formally bans the seller’s ability to advertise a commission for the buyer’s reps on the multiple listing service.

For its part, the NAR has maintained that the free market has always set commission levels, and that they were always negotiable — and even useful.

“Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers,” the NAR said in its March 15 statement announcing the agreement.

But in most cases, there was little difference in the amount being offered for those commissions in a given market — usually about 3%.

That’s because any attempt to offer a lower commission to a buyer’s agent would likely motivate the agent to direct their client away from that property.

Miller characterized that behavior as improper and said buyers, in many cases, would have had no awareness of it.

“The future here is that buyers will now be in the driver’s seat,” Miller said. “Instead of that [commission] money going to their agent … it can now go directly to the buyer. It’s the same amount of money, but now the buyer gets money instead of a buyer agent, and they can decide what to do with it.”

What’s more, greater competition for clients is likely to result in lower costs across the board, said Ryan Tomasello, a real estate industry analyst with the Keefe, Bruyette & Woods financial firm.

“When you introduce a ton of transparency to a marketplace that has historically lacked it, any economist will tell you that reduces friction costs — i.e., commissions — and those are some of the highest in the world,” Tomasello said. “So the all-in cost of buying and selling a home, in theory, is going to decline.”

Many experts, including other real estate professionals, agree that the settlement will effectively thin the ranks of fly-by-night agents who served as an intermediary — a phenomenon that surged during the pandemic-era housing boom.

“A lot of folks parachuted in during 2020-2021 to try to make easy extra money by putting themselves out there as a buyer agent and taking 3%,” said Phil Crescenzo Jr., vice president of the Southeast division at Nation One Mortgage Corp.

“But they weren’t bringing 3% of value — not even close.”

Crescenzo compared it to moonlighting mortgage brokers who helped fuel the housing bubble of the mid-to-late 2000s.

“Once they changed the compensation rules, the dominant professionals rose to the top, the bottom disappeared, and the industry got better,” Crescenzo said.

Share this @internewscast.com
You May Also Like
Jeanette Olivo not guilty by reason of insanity in stabbing of dog on Chicago's Northwest Side in 2022, police say

Chicago Incident: Jeanette Olivo Found Not Guilty in 2022 Dog Stabbing Due to Insanity Defense

CHICAGO (WLS) — A woman was found not guilty by reason of…
Manchester synagogue car and stabbing attack leaves at least 2 dead on Yom Kippur

Car and stabbing attack at Manchester synagogue on Yom Kippur results in at least two fatalities

A brutal car and knife attack near a UK synagogue on Yom…
Hispanic Heritage Month: Chicago fire station transformed into Yollocalli art museum in Little Village

Hispanic Heritage Month: Chicago Fire Station Converted into Yollocalli Art Museum in Little Village

CHICAGO (WLS) — A former fire station in Chicago has been transformed…
Starmer’s digital ID work requirement sparks uproar from UK's left and right

Starmer’s Proposal for Digital ID Work Requirement Faces Backlash Across UK Political Spectrum

The United Kingdom’s political spectrum, from right-wing to left-wing, has united in…
UK stabbing, vehicle attack injures 4 outside synagogue, police say

Four people injured in UK stabbing and vehicle assault near synagogue, police report

At least four people were injured Thursday morning in a car and…
Prince William gives rare Kate Middleton cancer update in vulnerable talk with Eugene Levy

Prince William Shares Heartfelt Update on Kate Middleton’s Cancer Journey in Candid Conversation with Eugene Levy

Prince William provides a rare update on his wife, Kate Middleton, after…
Homeowners await Rebuild Florida aid 8 years after Irma

Eight Years After Irma, Homeowners Still Waiting for Rebuild Florida Assistance

State Senator Clay Yarborough is calling for action after seeing firsthand the…
Prosecutors hammer Charlie Kirk assassination suspect with ‘voluminous’ DNA, gun, text and rooftop evidence

Prosecutors Present Extensive Evidence Against Charlie Kirk Assassination Suspect, Including DNA, Gun, Texts, and Rooftop Data

Prosecutors in the Tyler Robinson case wasted no time in declaring they…
Texas megachurch founder Robert Morris pleads guilty to child sex abuse charges

Texas Megachurch Leader Robert Morris Admits to Child Sexual Abuse Offenses

The founder of a Texas megachurch, who stepped down last year following…
Musk becomes first person worth $500B

Musk Achieves Status as First $500 Billion Individual

(The Hill) — Elon Musk, the technology tycoon, temporarily reached a net…
Trial day 2 explores evidence in Prince Holland case

Second Day of Hearings Delves into Prince Holland Case Evidence

Jurors were shown of crime scene photos, walked through bullet-ridden evidence and…
Trump's peace deal could end the war in Gaza or Netanyahu's career

Trump’s Peace Proposal: A Chance to Resolve the Gaza Conflict or Alter Netanyahu’s Political Future

A 20-point peace plan proposed by President Donald Trump this week could…