New Real Estate Commission Changes 2024

So, first of all, could explain to us, what exactly these new rules are going into effect, and what they mean for home buyers and sellers?

What do the new rules mean for home buyers and sellers?

It’s a great question, and I think that clients are going to see a couple of things. For some, updated language in the contracts between you and your realtor is just about how that realtor is being compensated for their services. And I think kind of the biggest change that we’re gonna see here locally is that any offer by the seller to compensate the buyer’s agent will be coming off of the Multiple Listing Service, the MLS. Before all of this, this was kind of advertised out there and a little bit more available. Now, it’s going to bring those conversations between clients and brokers on a case-by-case basis when you’re looking at houses. Overall, Mark, I think that more transparency is better. We were ahead of the curve here in Colorado because our agreements have always spelled out who’s going to pay the realtors and how much. Commissions have always been negotiable here in Colorado. But I think, Mark, that wasn’t as clear in other states, which, in my opinion, is how we landed in this legal mess.

Understanding the Impact of Commission Changes on Home Buyers

Historically: This is how it’s played out here in Colorado, although sellers haven’t had to pay if they don’t want to.

Important for Buyers: If you are buying a house, it’s important to understand how realtors get paid.

Two Ways Realtors Get Paid:

Seller Pays: The seller can agree to pay the buyer’s agent, which is what you were talking about. Historically, this is what we’ve seen here locally, but they haven’t had to.

Buyer Pays: In cases where the seller isn’t willing to per our agreement together, Mark, the buyer would be obligated to make up the difference and pay their agent.

Buyer Concerns:  

Many people are thinking, “Gosh, it’s already expensive enough. I’ve got closing costs. The interest rates are high. I don’t want to have to pay commission now if I don’t have to.”

Negotiation Option:  

The buyer can still add that compensation to the offer and make it a part of the negotiations.

This has been the case for a while—just like we want the swing set in the backyard, and want to negotiate the fridge in the garage, we can negotiate the commission in the price of the house.

Key Conversations for Buyers:  

Buyers should be asking: Is the seller paying compensation?
If not, am I willing to take the risk of paying that?
Or, do we want to look at a different house?

Impact of Decreasing Interest Rates on Home Affordability and the Real Estate Market

Positive Differences:  

It’s starting to make some positive differences, which—this is all really kind of—this downward trend happened last week when a jobs report came out.

Interest Rate Cut Anticipation:  

We anticipate the Fed will cut interest rates in September—at least we’re hoping that will be the case—because yes, it does result in lower mortgage rates.

Current Savings:  

Already, Mark, we’re seeing buyers who are saving between $200 and $400 a month with average prices, just bringing these rates now into the low 6% range.

Trend Continuation:  

We’d like to see that trend continue because there are a lot of people hanging out on the sidelines waiting for the rates to be cut just to get a little bit easier.

Significance of Rate Changes:  

It’s amazing what just a quarter of a percentage point can do when you’re buying a house.

It’s a great investment in the long term.

Brian Cheung:

Yes. This Follows A Big Settlement From The National Association Of Realtors Earlier This Spring. It will give home sellers a lot more transparency and negotiation power in the fees they pay when they sell their Homes. If You Sold Your Home With 5% Or 6% Commission And You Pay For That. Usually, The Agent For The Seller Is Going To Split That 5%, 6% Bounty With The Agent Of The Buyer Who Ultimately Buys The Home. Now They Will Have To Be More Upfront About How Those Fees Are Negotiated. If You Are A Seller, You May Say, I Don’t Want To Work With This Agent Unless I Can Get A 4% Or 5% Commission. Experts Are Telling Us That Could In Some Cases Lower The Fees That Sellers Pay. 

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