Consumers who were eagerly awaiting substantial savings from a National Association of Realtors’ settlement regarding agent commissions may be in for a letdown, as experts caution about the actual impact.
The settlement, praised by President Joe Biden and former Treasury Secretary Larry Summers for its potential to save homebuyers and sellers significant amounts, particularly comes at a challenging time for the housing market. With soaring mortgage rates and historically unaffordable markets, the expected benefits remain uncertain, especially for first-time buyers.
While the agreement theoretically could lower home prices by reducing commissions, experts highlight the complexities of the market, suggesting immediate price drops are unlikely. The NAR emphasized that commissions were always negotiable and denied being the cause of the affordability crisis.
The restructuring of agent compensation, long criticized for inflating costs, culminated in a $1.8 billion verdict against the NAR. The subsequent settlement aims to alter industry rules, notably prohibiting sellers from disclosing compensation details on multiple-listing services, potentially leading to lower commissions. However, speculation persists that agents may find alternative ways to negotiate commissions.
Economists predict a gradual decline in commissions, with sellers likely benefiting the most. The settlement’s impacts, including whether savings will be passed on to buyers, remain uncertain, especially in seller-driven markets.
Agents are already adapting to the impending changes, exploring new pricing models and emphasizing value-added services. While the settlement marks a significant step, observers anticipate incremental changes rather than an immediate industry transformation.
