Let’s Get Real about Commissions. There have been a ton of sensational headlines in recent days about a settlement the National Association of REALTORs proposed last week, and I’m here to set the record straight.
There are some who think this settlement will revolutionize how real estate transactions work. Well, that may be true in Missouri where the class-action lawsuit was initially filed, but out here in California we already operate very similarly to the proposed settlement terms.
For example, the biggest change will decouple commissions, meaning the seller pays their realtor and the buyer pays their realtor. Now, there are some significant downsides to mandating decoupled commissions that we don’t have time to get into on this post, but again in California there are already buyer contracts that state a buyer is ultimately responsible for paying their own realtor. While not required, I’ve been using these buyer-agreements for years and require all of my team to use it too so I don’t anticipate significant changes to my practice and interactions with clients.
In most transactions today the seller ends up compensating the buyer’s agent, and I think that will remain the norm. Informed and intelligent sellers will continue to see the value a buyer’s agent brings to the successful marketing and sale of their home, and will continue to offer compensation at similar levels as they do today.
The procedural changes proposed in the settlement agreement are not finalized and even if they do they won’t take effect until the second half of this year, so it’s a bit too soon to know exactly how things may play out, but rest assured REALTORs will continue to be a valuable part of clients home buying and selling experiences.
Matt Sundermier's Memos on Real Estate & on Life 