The Real Estate Revolution: Navigating Recent Changes
The real estate industry is currently a hot topic in the media, with major changes on the horizon. Opinions range from the industry’s demise to predictions that real estate services will soon be offered for free. As someone with over four decades of experience in helping buyers and sellers, I can’t help but roll my eyes at the uninformed opinions being celebrated.
Let’s delve into the two primary changes mandated by the National Association of REALTORS’ settlement. The outcome was driven by an underestimation of class action attorneys’ influence, resulting in hefty attorneys’ fees eclipsing the relatively modest payout per participant. Most participants didn’t even have any complaints to begin with.
- Revised Commission Display: Sellers are no longer required to display the compensation offered to brokers assisting buyers in purchasing a home in the Multiple Listing Service. This change necessitates buyer agents to individually reach out to listing agents for compensation details or find alternate methods to acquire this information. The guaranteed compensation has been replaced by a representation, mandating separate agreements between brokerages before buyer offers are submitted.
- Buyer-Broker Representation Agreement: All REALTORS are now obligated to have a buyer-broker representation agreement in place to request compensation for real estate services before showing buyers any property. This compensation can be fully or partially covered by the seller. These agreements can include flexible terms regarding covered properties and the associated timeframes.
While these changes were touted as consumer-friendly, some industry insiders, like myself, hold a contrary view. In my extensive experience, buyers preferred commission inclusion in the purchase price rather than paying it directly. The freedom to view properties without commitment and select a representative when ready was appreciated. The payment of commissions by sellers to buyer brokers was always optional prior to the settlement.
The lawsuit’s aim to completely separate selling and buyer commissions remains unfulfilled. Parties were never restricted from compensating each other’s brokers before and won’t be now. Sellers retain the ability to decline offering compensation to a buyer’s broker with a simple request.
In light of these changes, real estate transactions have become more complex and seem to limit choices for customers. This shift may impede property owners’ rights to buy or sell homes as they see fit, reminiscent of a ‘Brexit moment’ where the repercussions weren’t apparent until after the fact.
Real estate isn’t a public utility but a business where owners set charges in a competitive market. Brokerages will continue to set fees as in any other professional service, offering a range of services from discount to premium, aligning with market demand and competition.
As the industry adapts to these changes, we are prepared to serve our clients’ needs diligently, just as we always have. While class action attorneys might be celebrating their wins, our focus remains on ensuring our customers achieve their real estate goals. The show must go on, and we are ready to face the challenges ahead.
Budge Huskey, CEO at Premier Sotheby’s International Realty.
