SOUTHFIED, Mich. (WXYZ) — Big changes are coming to the real estate world that could mean money in sellers' and buyers' pockets and the cost to buy a home coming down.
Last week, the National Association of Realtors announced an agreement that would end litigation brought on behalf of home sellers in connection to broker commissions.
Under the settlement, homeowners looking to sell will no longer be on the hook to pay out commission fees for buying agents but only to the agent they hired to sell their property.
"Commissions have always been negotiable, but there’s always been a standard and there’s been a standard in the state of Michigan, typically five to six percent," Maynard Neal with NERG Real Estate Experts said.
Neal says that 5% to 6% commission rate is traditionally given to the seller's agent who then splits the proceeds and pays the buyer's agent. As that goes away, Neal predicts seeing a 2% to 3% commission rate instead.
He says this means homeowners who are selling can now list their properties for lower rates, which will bring down costs and make them more enticing for buyers.
Alternatively, they can spend less money in fees associated with selling a piece of property.
"At the end of the day, I think it’s going to be a good thing for the sellers and it can be a good thing financially for the buyers only if the buyer is savvy enough and the deal is not too complicated because buyer's (agents) are worth their weight in gold," Neal said. "The issue now is how are they going to get paid."
Neal predicts some consumers looking to purchase homes will take this as an opportunity to forego using the services of a buying agent altogether but that could mean more inexperienced parties trying to navigate the real estate market. He also predicts some buyer's agents will begin to charge flat rates for their services.
"It’s still very important. I think everyone needs representation and it’s always been less expensive to work with a buyer's agent than sometimes going at it alone because the cost of not knowing can be so much greater than the cost of just paying an agent a percentage," Neal said.
Neal says the settlement will impact many buyer's agents across the state, but it's too early to know the exact impact it will ultimately have.
"The roles that have been in place have been in place for a reason and I know times change and we will have to adjust to this, and will it be tough navigating the waters? Absolutely, but I think we’re very resilient," Neal said.
The change is set to take effect in July. To read more on the changes coming as a result of the settlement, visit the National Association of Realtors' website.
