How sweeping changes in real estate will impact buyers, sellers and agents
New rules in real estate could save home buyers and sellers a lot of money.
The changes involve the fees and commissions that realtors charge, giving more power to the consumer.
It is the biggest shakeup the real estate industry has seen in three decades. Historically, a seller's agent charged sellers a 5% or 6% commission and that commission money was then split with the buyer's agent.
Now buyers and sellers will have to negotiate their own agent commissions.
"Home buyers are going to have to negotiate the compensation for their own agents," said Holden Lewis with NerdWallet. "The idea behind this is to increase competition."
Lewis, who is a home and mortgage expert, said home buyers should interview at least two agents and be prepared to negotiate how and how much they'll pay.
"Some agents might experiment with flat fees and others might charge hourly rates," he said. Some might act kind of like attorneys, and you pay a retainer fee at the beginning and maybe an hourly rate."
Sellers also need to be aware that buyers will likely still ask you to pay their agent. You can agree or insist on splitting the cost of the two agents, or even ask the buyer to bump up the offer.
Another change is compensation for buyer's agents, which can no longer be posted on the MLS or multiple list services.
"The concern for real estate agents and brokers serving this community is there will be a lack of transparency," said Hope Atuel with AREAA.
Hope Atuel is the executive director of AREAA, the Asian Real Estate Association of America. She's worried the new rules will create a heavier financial burden on buyers who might have to bring more cash to closing to cover their agent's 2% or 2.5% commission.
"For those who are entering the market, it's going to be increasingly more difficult," she added.
Both Atuel and Lewis said the real estate industry has been undergoing massive retraining to implement the new rules as smoothly as possible and suggest having a candid conversation with your agent to help navigate the new rules.
"Bottom line is that there's just going to be more negotiation all around with these new rules," said Lewis.