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2019 vs. 2024: Homes are harder to find, and even harder to afford
The median list price of homes for sale nationally is up 37.5% compared to May 2019, five years ago.
Scripps News
The real estate industry is rolling out new rules for paying buyers’ and sellers’ agents beginning Aug. 17 in a move that advocates say could lower overall commissions, but also put pressure on consumers to shop for skilled real estate agents and read the fine print.
The rules change a decades-long financial arrangement between the two sides. Sellers, for example, will no longer be required to pay buyers’ agents, while buyers will need to sign contracts with their agents that lay out their compensation terms.
“The new rules provide both opportunities and risks for consumers,” said Stephen Brobeck, a senior fellow with the Consumer Federation of America. “Knowledgeable home buyers and sellers will be able to take advantage of the opportunities and avoid the risks.”
The National Association of Realtors agreed to the new rules in March to settle class-action lawsuits that accused the trade group of conspiring to keep commissions artificially high. The Realtors group said it would pay $418 million over four years and change some of its practices, but it denied wrongdoing.
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The rule comes as New Jersey adds its own requirements for real estate agents. As part of a state law that took effect Aug. 1, buyers need to sign a representation agreement with their agent before starting the homebuying process, outlining how they will be compensated for their work.
All told, the changes could mean buyers pay more and sellers pay less, although real estate agents still are unsure how the process will play out.
“Nobody likes change, but I think most people who have been in the business for a long time feel like we’ve gone through other big changes in the industry. You just adapt,” said Diane Traverso, an agent with NextHome Nexus Realty Group in Toms River and president of the Monmouth Ocean Regional Realtors trade group.
The litigation involving the National Association of Realtors took aim at a long-standing rule that required sellers’ agents to compensate buyers agents and post the agreement on the Multiple Listing Service, a platform operated locally by the Monmouth Ocean Regional Realtors, where buyers’ agents can see what’s for sale in the area.
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Consumer advocates said the practice was anti-competitive. They argued it left sellers paying 5% to 6% of the sales price in commission, effectively eliminating the bargaining power that a buyer could bring to the transaction. And it opened the door for buyers’ agents to steer their clients to sales that could pay them more.
As part of the National Association of Realtors settlement, sellers are no longer required to compensate buyers’ agents, and buyers need to sign agreements with their agents spelling out the compensation terms.
Sellers’ agents still can share their commission with buyers’ agents, but they can’t disclose the agreement on the MLS.
“I think the best way (to find out if the commission is being shared) is for the buyer’s agent to call the seller’s agent and just ask,” Traverso said.
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Brobeck from the Consumer Federation of America offered advice:
- Select an honest, competent broker or agent who understand and can explain the new compensation system. Check reviews on sites such as Zillow, Realtor.com and Homes.com.
- Read and evaluate seller and buyer agreements, taking note of blanks that are filled in. Consumers should be wary of commitments to compensate an agent before they have decided to be a client.
- Discuss and negotiate commissions in dollar amounts.
“Buyers should take the opportunity to (negotiate), setting a goal in dollar terms of 2% of the home sale price, or less,” the Consumer Federation of America said. “And so should sellers, who have had the same opportunity but frequently have decided not to pursue it.”
Michael L. Diamond is a business reporter for the Asbury Park Press who has been writing about the New Jersey economy, housing market and health care industry since 1999. He can be reached at mdiamond@gannettnj.com.