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 Mon, Aug 12 2024, 3:23 pm
Biggest shakeup in a century set to hit real estate agents this week: Here’s how they’re preparing
Samantha Delouya
Realtors across the US are bracing for a seismic shift in the way they do business. Starting August 17, new rules will roll out that overhaul the way Realtors get paid to help people buy and sell their homes.
The changes, which are part of a $418 million settlement announced in March by the powerful trade group the National Association of Realtors, eliminate informal rules that propped up the industry’s traditional payment structure, where home sellers were typically on the hook to pay a 5% or 6% commission, usually split between their agent and the agent representing their home seller.
In the months since the settlement was announced, Realtors across the country have been preparing for the change, attending trainings and poring over the details of new contracts they must sign with prospective homebuyers. Some agents predict the rules will pave the way for new business models and potentially drive many full-service Realtors to leave the industry, while others are more sanguine about the impending changes.
“This is a grand social experiment in an industry at scale,” Leo Pareja, CEO of eXp Realty, one of the largest real estate brokerages in the US, said. “I’m bracing my agents for what I call the ‘messy middle.’ I fully expect a lot of confusion.”
In a statement, NAR’s president, Kevin Sears, said he was confident NAR members would adapt to the changes, which industry analysts have called the biggest change in America’s real estate market in a century.
“These changes help to further empower consumers with clarity and choice when buying and selling a home,” Sears said. As August 17 nears, “I am confident in our members’ abilities to prepare for and embrace this evolution of our industry and help to guide consumers in the new landscape.”
What’s about to change?
Historically, a seller’s agent charged homesellers a fee, often 5% or 6% of a home’s purchase price, that was intended to be shared with the buyer’s agent. That meant that homesellers could be on the hook for serious cash: A seller of a $1 million home might pay out $60,000 in commissions. Some experts have said that money was baked into homes’ listing prices, inflating the price of homes for sale.
A series of lawsuits alleged this standard practice violated antitrust laws, though the NAR has long argued that the commissions were always negotiable.
Along with a monetary payout, the NAR agreed to two key rule changes as part of an agreement to settle the lawsuits. Both take effect on August 17 and are designed — in theory — to shake loose the standard way of paying out commissions.
A judge granted preliminary approval of the NAR’s settlement in April, but the final approval hearing is scheduled for November 26.
The first change prohibits agents’ compensation from being included on multiple listing services, which are centralized databases used by Realtors to share details about homes for sale. Compensation details can still be advertised elsewhere or communicated in person or over the phone, though.
The second change requires buyers’ agents to discuss their compensation upfront. Come August 17, agents working with a prospective homebuyer must now enter into a written buyer agreement before touring a property together. This agreement is designed to inform buyers that they are responsible for paying their own Realtors if a seller chooses not to cover the cost.
However, prior to the changes, Realtors in 18 states were already required to sign buyer agency agreements. Mary Schumann, a Realtor in Minnesota, said that to her, NAR’s changes seem manageable.
“I always tend to wait and see how things shake out before I panic,” Schumann said. “We already do buyers agreements here, and this doesn’t seem to be incredibly different.”
Newer business models see an opportunity
By some estimates, real estate commissions could fall between 25% to 50%, according to a March analysis by TD Cowen Insights. This could pave the way for real estate companies with alternative business models, like flat-fee and discount brokerages, to thrive.
Shelly Cofini, the chief strategy officer at Redy, said she believed the NAR settlement would benefit her company. Redy, which operates nationwide, is a marketplace that allows real estate agents to bid on home listings, meaning agents could pay homesellers for the opportunity to represent them, cutting into their own commissions.
“This is part of this notion of shifting how real estate is always done,” Cofini said. “Because agents are in control of the proposal process, they decide on the cash incentive they’ll offer and they decide on the commission structure they’re willing to offer.”
Companies are seeking to capitalize on the impending changes in other ways, too. Flyhomes operates as a traditional real estate brokerage, but earlier this summer, the company launched an AI chatbot designed to answer questions that a homebuyer might traditionally ask their Realtor.
“Consumers don’t know this is coming,” Flyhomes’ chief strategy officer, Adam Hopson, said of the NAR changes. “When they decide they want to buy a home and they find they have to sign a contract, they may say, ‘whoa, what is this?’ We think this will drive them to find information from other sources. We will be one of those sources.”
Will more Realtors call it quits?
Under the old standard, buyers often got representation for free, since their agent’s commissions came from the homeseller’s pocket.
Many Realtors who spoke to CNN said they believe the new set of rules will reward more experienced Realtors and shut out younger agents, since homebuyers may be wary of signing a legally binding agreement that ties them to a more inexperienced Realtor.
At 19, Madison Mathias, a Realtor in Chapin, South Carolina, said she has had to work overtime to dispel preconceived notions about her age to prospective clients, often re-reading contracts at night to ensure she has the details memorized.
Mathias said she thinks some Realtors will leave the industry, but she doesn’t believe age will be a factor.
“I think more agents will fall off because some people don’t like change,” she said. “Being a new agent, I have had some people question me, but I’ve never had somebody not want to work with me because of my time in the business. It’s all about confidence and educating yourself.”
“I’m not really worried about it too much,” she added.
For more CNN news and newsletters create an account at CNN.com
https://www.yahoo.com/finance/......html
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amother
Stoneblue
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Wed, Aug 14 2024, 8:40 am
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amother
Aconite
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Wed, Aug 14 2024, 9:10 am
| amother OP wrote: | Biggest shakeup in a century set to hit real estate agents this week: Here’s how they’re preparing
Samantha Delouya
Realtors across the US are bracing for a seismic shift in the way they do business. Starting August 17, new rules will roll out that overhaul the way Realtors get paid to help people buy and sell their homes.
The changes, which are part of a $418 million settlement announced in March by the powerful trade group the National Association of Realtors, eliminate informal rules that propped up the industry’s traditional payment structure, where home sellers were typically on the hook to pay a 5% or 6% commission, usually split between their agent and the agent representing their home seller.
In the months since the settlement was announced, Realtors across the country have been preparing for the change, attending trainings and poring over the details of new contracts they must sign with prospective homebuyers. Some agents predict the rules will pave the way for new business models and potentially drive many full-service Realtors to leave the industry, while others are more sanguine about the impending changes.
“This is a grand social experiment in an industry at scale,” Leo Pareja, CEO of eXp Realty, one of the largest real estate brokerages in the US, said. “I’m bracing my agents for what I call the ‘messy middle.’ I fully expect a lot of confusion.”
In a statement, NAR’s president, Kevin Sears, said he was confident NAR members would adapt to the changes, which industry analysts have called the biggest change in America’s real estate market in a century.
“These changes help to further empower consumers with clarity and choice when buying and selling a home,” Sears said. As August 17 nears, “I am confident in our members’ abilities to prepare for and embrace this evolution of our industry and help to guide consumers in the new landscape.”
What’s about to change?
Historically, a seller’s agent charged homesellers a fee, often 5% or 6% of a home’s purchase price, that was intended to be shared with the buyer’s agent. That meant that homesellers could be on the hook for serious cash: A seller of a $1 million home might pay out $60,000 in commissions. Some experts have said that money was baked into homes’ listing prices, inflating the price of homes for sale.
A series of lawsuits alleged this standard practice violated antitrust laws, though the NAR has long argued that the commissions were always negotiable.
Along with a monetary payout, the NAR agreed to two key rule changes as part of an agreement to settle the lawsuits. Both take effect on August 17 and are designed — in theory — to shake loose the standard way of paying out commissions.
A judge granted preliminary approval of the NAR’s settlement in April, but the final approval hearing is scheduled for November 26.
The first change prohibits agents’ compensation from being included on multiple listing services, which are centralized databases used by Realtors to share details about homes for sale. Compensation details can still be advertised elsewhere or communicated in person or over the phone, though.
The second change requires buyers’ agents to discuss their compensation upfront. Come August 17, agents working with a prospective homebuyer must now enter into a written buyer agreement before touring a property together. This agreement is designed to inform buyers that they are responsible for paying their own Realtors if a seller chooses not to cover the cost.
However, prior to the changes, Realtors in 18 states were already required to sign buyer agency agreements. Mary Schumann, a Realtor in Minnesota, said that to her, NAR’s changes seem manageable.
“I always tend to wait and see how things shake out before I panic,” Schumann said. “We already do buyers agreements here, and this doesn’t seem to be incredibly different.”
Newer business models see an opportunity
By some estimates, real estate commissions could fall between 25% to 50%, according to a March analysis by TD Cowen Insights. This could pave the way for real estate companies with alternative business models, like flat-fee and discount brokerages, to thrive.
Shelly Cofini, the chief strategy officer at Redy, said she believed the NAR settlement would benefit her company. Redy, which operates nationwide, is a marketplace that allows real estate agents to bid on home listings, meaning agents could pay homesellers for the opportunity to represent them, cutting into their own commissions.
“This is part of this notion of shifting how real estate is always done,” Cofini said. “Because agents are in control of the proposal process, they decide on the cash incentive they’ll offer and they decide on the commission structure they’re willing to offer.”
Companies are seeking to capitalize on the impending changes in other ways, too. Flyhomes operates as a traditional real estate brokerage, but earlier this summer, the company launched an AI chatbot designed to answer questions that a homebuyer might traditionally ask their Realtor.
“Consumers don’t know this is coming,” Flyhomes’ chief strategy officer, Adam Hopson, said of the NAR changes. “When they decide they want to buy a home and they find they have to sign a contract, they may say, ‘whoa, what is this?’ We think this will drive them to find information from other sources. We will be one of those sources.”
Will more Realtors call it quits?
Under the old standard, buyers often got representation for free, since their agent’s commissions came from the homeseller’s pocket.
Many Realtors who spoke to CNN said they believe the new set of rules will reward more experienced Realtors and shut out younger agents, since homebuyers may be wary of signing a legally binding agreement that ties them to a more inexperienced Realtor.
At 19, Madison Mathias, a Realtor in Chapin, South Carolina, said she has had to work overtime to dispel preconceived notions about her age to prospective clients, often re-reading contracts at night to ensure she has the details memorized.
Mathias said she thinks some Realtors will leave the industry, but she doesn’t believe age will be a factor.
“I think more agents will fall off because some people don’t like change,” she said. “Being a new agent, I have had some people question me, but I’ve never had somebody not want to work with me because of my time in the business. It’s all about confidence and educating yourself.”
“I’m not really worried about it too much,” she added.
For more CNN news and newsletters create an account at CNN.com
https://www.yahoo.com/finance/......html |
Can you summarize and explain in layman's terms what the impact is?
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amother
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Wed, Aug 14 2024, 9:22 am
This article discusses significant changes coming to the real estate industry in the U.S., particularly regarding how real estate agents get paid. Traditionally, when someone sells a home, they often pay a commission fee, typically 5% or 6% of the home's selling price, which is shared between the seller's agent and the buyer's agent. This has been a standard practice for years but is now set to change due to a legal settlement.
Starting on August 17, new rules will come into effect, forcing changes in how these commissions are handled:
1. **Listing Services Change**: Agents' compensation details will no longer be listed on multiple listing services (MLS), which are databases used by realtors to share information about homes for sale. This change could make it harder for buyers and sellers to see what agents are earning upfront.
2. **Buyer Agreement Requirement**: Buyers’ agents will now have to discuss and agree on their payment with their clients before they start working together. This is a big shift because, in the past, the seller often covered the buyer's agent's fees.
These changes could reduce real estate commissions by 25% to 50%, which might encourage new business models, like flat-fee or discount brokers, to become more popular. However, some realtors believe that these changes might push less experienced or newer agents out of the industry because clients may prefer to work with more seasoned professionals who they trust to navigate these new rules.
Overall, while some real estate professionals are worried about these changes, others are optimistic and believe they can adapt to the new landscape.
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amother
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Wed, Aug 14 2024, 9:22 am
| amother Aconite wrote: | | Can you summarize and explain in layman's terms what the impact is? |
The article talks about some big changes happening in how real estate agents (the people who help you buy or sell a house) will get paid.
**Here’s what’s changing:**
1. **How Agents Get Paid:** Normally, when someone sells a house, they pay their agent a fee, usually around 5% or 6% of the house's price. This fee is split between the seller’s agent and the buyer’s agent. But starting August 17, new rules are coming that will change this.
2. **Less Transparency on Payments:** The money an agent will make won’t be shown on the same databases that agents use to find houses for sale. This means people might not easily see how much their agent is earning.
3. **New Contracts for Buyers:** If you’re buying a house, your agent will now have to talk to you about how they’ll get paid, and you’ll have to sign a contract before you start looking at houses together. Before, the seller usually paid the buyer’s agent, so the buyer didn’t have to worry about it. Now, buyers might have to pay their agent directly.
These changes might cause some agents to leave the job, especially if they’re newer or less experienced, because buyers might prefer working with agents who have been around longer and know what they’re doing.
Overall, the way real estate agents work and get paid is going to be different, and some people think it will lead to lower fees and new ways of doing business.
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amother
Birch
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Wed, Aug 14 2024, 9:30 am
| amother NeonPurple wrote: | The article talks about some big changes happening in how real estate agents (the people who help you buy or sell a house) will get paid.
**Here’s what’s changing:**
1. **How Agents Get Paid:** Normally, when someone sells a house, they pay their agent a fee, usually around 5% or 6% of the house's price. This fee is split between the seller’s agent and the buyer’s agent. But starting August 17, new rules are coming that will change this.
2. **Less Transparency on Payments:** The money an agent will make won’t be shown on the same databases that agents use to find houses for sale. This means people might not easily see how much their agent is earning.
3. **New Contracts for Buyers:** If you’re buying a house, your agent will now have to talk to you about how they’ll get paid, and you’ll have to sign a contract before you start looking at houses together. Before, the seller usually paid the buyer’s agent, so the buyer didn’t have to worry about it. Now, buyers might have to pay their agent directly.
These changes might cause some agents to leave the job, especially if they’re newer or less experienced, because buyers might prefer working with agents who have been around longer and know what they’re doing.
Overall, the way real estate agents work and get paid is going to be different, and some people think it will lead to lower fees and new ways of doing business. |
Hi AI
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amother
Powderblue
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Wed, Aug 14 2024, 9:33 am
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Realtors have been knowing about the change for a long time already. I work in an office that is closely related to real estate but not real estate. We have done seminars on this topic with professionals about six to eight times already. I don't know if more real estate agents are going to leave the field over it, but it kind of makes sense to be honest.
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amother
Jetblack
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Wed, Aug 14 2024, 9:34 am
| amother Powderblue wrote: | | Realtors have been knowing about the change for a long time already. I work in an office that is closely related to real estate but not real estate. We have done seminars on this topic with professionals about six to eight times already. I don't know if more real estate agents are going to leave the field over it, but it kind of makes sense to be honest. |
can you explain what exactly is changing?
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amother
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Wed, Aug 14 2024, 9:38 am
Lol I'm not the ai lady but yeah I put it into ai. Still don't understand it though even though I said write like I'm in 7th grade lol
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amother
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Wed, Aug 14 2024, 9:38 am
My question is what is changing for buyers or sellers.
I see the focus is on the changes for the agents.
But practically what is changing for me, the regular person who might want to buy a house, or might want to sell my house.
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amother
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Wed, Aug 14 2024, 9:41 am
| amother NeonPurple wrote: | | Lol I'm not the ai lady but yeah I put it into ai. Still don't understand it though even though I said write like I'm in 7th grade lol |
For the record AI is banned on this site
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amother
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Wed, Aug 14 2024, 9:44 am
| amother Lemonlime wrote: | My question is what is changing for buyers or sellers.
I see the focus is on the changes for the agents.
But practically what is changing for me, the regular person who might want to buy a house, or might want to sell my house. |
You as a buyer would have to pay your own agent. It used to be only the seller paid both agents
It seems like there will also be changes to the commission they can charge which used to be a percentage, and now it seems a lot will start charging a flat rate to maximize their profits (so for example instead of percentage where it might be low like 1%, they’d just say the fee is 30k)
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BH Yom Yom
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Wed, Aug 14 2024, 9:46 am
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A lot of this went over my head, but it sounds like a main difference is that potential buyers would have to sign a contract with an agent before they even start looking at houses. I don’t love the sound of that because what if you end up not wanting to buy any of the houses that agent shows you, or as you’re talking to the agent you got the sense that they’re not the right agent for you to work with? Are you then legally stuck using them because of whatever contract?
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amother
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Wed, Aug 14 2024, 9:50 am
| BH Yom Yom wrote: | | A lot of this went over my head, but it sounds like a main difference is that potential buyers would have to sign a contract with an agent before they even start looking at houses. I don’t love the sound of that because what if you end up not wanting to buy any of the houses that agent shows you, or as you’re talking to the agent you got the sense that they’re not the right agent for you to work with? Are you then legally stuck using them because of whatever contract? |
I think this would push people to no longer use agents when buying
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amother
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Wed, Aug 14 2024, 9:50 am
| amother Mulberry wrote: | You as a buyer would have to pay your own agent. It used to be only the seller paid both agents
It seems like there will also be changes to the commission they can charge which used to be a percentage, and now it seems a lot will start charging a flat rate to maximize their profits (so for example instead of percentage where it might be low like 1%, they’d just say the fee is 30k) |
Is there going to be a change to the prices at all?
Or is it going to be simply buyers having to absorb more money?
Im actually almost at buying a house. And I'm frustrated that none of the articles talk about this.
They talk about how it will effect the agents but nothing about the regular people.
Am I as a potential buyer going to have to cough up an additional 30k from somewhere for my agent or will the house prices be a bit lower because of the agents fees artificially raising the prices.
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amother
Beige
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Wed, Aug 14 2024, 10:06 am
I am not seeing a difference.
Buyers always had to pay their agents but it was accepted that the seller would absorb the fee. If they refuse to, then buyer has to pay anyway according to most contracts.
The difference seems to be you can't show a house anymore without a contract. That's annoying. However, most agents require a contract before they put in a bid for you anyway so eventually you sign a contract. I'm sure there will be clauses to end a contract if the agent doesn't have what you need.
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amother
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Wed, Aug 14 2024, 10:08 am
| amother Clear wrote: | | I think this would push people to no longer use agents when buying |
Possibly, though it would be very hard to deal with the buying process and the sellers agent would have much less incentive to push for your offer to go through- why would they want to deal with someone who doesn’t know what they’re doing as opposed to a professional?
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amother
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Wed, Aug 14 2024, 10:10 am
| amother Beige wrote: | I am not seeing a difference.
Buyers always had to pay their agents but it was accepted that the seller would absorb the fee. If they refuse to, then buyer has to pay anyway according to most contracts.
The difference seems to be you can't show a house anymore without a contract. That's annoying. However, most agents require a contract before they put in a bid for you anyway so eventually you sign a contract. I'm sure there will be clauses to end a contract if the agent doesn't have what you need. |
Sellers always paid the fee, at least in many states. The contract states that the commission paid by seller will be split between both realtors, whatever they end up paying it doesn’t matter
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amother
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Wed, Aug 14 2024, 10:11 am
| amother Lemonlime wrote: | Is there going to be a change to the prices at all?
Or is it going to be simply buyers having to absorb more money?
Im actually almost at buying a house. And I'm frustrated that none of the articles talk about this.
They talk about how it will effect the agents but nothing about the regular people.
Am I as a potential buyer going to have to cough up an additional 30k from somewhere for my agent or will the house prices be a bit lower because of the agents fees artificially raising the prices. |
The goal is that house prices are lowered. In reality I don’t see that happening, so I think all it’s going to do is cause buyers to have to pay more
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amother
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Wed, Aug 14 2024, 10:15 am
| BH Yom Yom wrote: | | A lot of this went over my head, but it sounds like a main difference is that potential buyers would have to sign a contract with an agent before they even start looking at houses. I don’t love the sound of that because what if you end up not wanting to buy any of the houses that agent shows you, or as you’re talking to the agent you got the sense that they’re not the right agent for you to work with? Are you then legally stuck using them because of whatever contract? |
I read through the entire legislation for NJ that went into effect 8/1
Basically buyers will sign an agreement with the agent before they work together, it can be non-exclusive, and it just is to have transparency in the price of services. The realtor will have to put in their fee (percentage, flat fee etc- there’s no laws about this so it can be anything high OR LOW) and have a specified timeframe that they get paid if you buy a house they themselves showed/did work for you etc
You will not be bound to only use that agent, make sure to ask for a non-exclusive contract and try to negotiate on lower rates.
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