BOZEMAN — Last Friday, the National Association of Realtors (NAR) announced a settlement agreement to end landmark antitrust lawsuits. They also passed a set of new rules that will change the home buying and selling business model forever.
“So the settlement is a good thing for us overall. It is getting things put to bed in a more settled manner,” said Cindi Siggs, the CEO of the Gallatin Association of Realtors (GAR).
Siggs explains that GAR has been involved in some of the antitrust lawsuits since October and that the $418 million settlement will have positive effects. She also has high hopes for some of the new rules.
“Something we’ve always advocated for is signing buyer agency agreements. Now that’s going to be required every time they go to show a home and they’re working with a buyer,” she says.
That's just one of the new rules adopted by NAR. But the rule that has most people in question? The end of the 6% commission.
“There has never been a 6% or a standard. I've seen commission rates way lower, I've seen commission rates higher than that,” says Siggs.
According to Scripps News, the 6% commission is most likely gone. But what does that mean? Let's break it down.
If you have a 6% commission, typically 3% goes to the buying agent and 3% goes to the selling agent. This new rule decouples the commission, meaning buyer and seller agents will now need to be paid individually, giving the selling agent more power.
So what does this mean for the buyer agents and how will they adjust their business model?
“I know people are gonna look at, are they gonna do flat fees? Will they be charging by the hour for the amount of work they do? So there's a lot still being figured out in how to work those models,” Siggs says.
And this uncertainty is expected to affect the buyer agent market, potentially making it more competitive.
“The concerns are, what if they don't choose to use an agent, those buyers out there,” says Siggs.
Luckily for buyer agents, the settlement won’t be approved until mid-July, so realtors and home buyers have plenty of time to figure out the new business model.
And, even though many experts are predicting home prices will drop thanks to the new rules, only time will tell.
As for Siggs' opinion, “I don't know that we will see it bringing those home prices down. I just don't at this point.”
