Navigating the New Real Estate Landscape
The real estate market is in for a shakeup! The National Association of Realtors (NAR) recently reached a settlement agreement that could change the way commissions are paid, impacting both buyers and sellers. While the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” said Kevin Sears, president of the NAR, in a statement. Here’s what you need to know about the NAR settlement and how it might affect your financing options after July 2024.
Goodbye Standard Commission Split, Hello Negotiation
Traditionally, sellers paid the commission for both the buyer’s and seller’s agent, typically a total of 6% of the sale price. The NAR settlement removes the requirement for this standard split. This means:
- Sellers might save: They could potentially negotiate a lower commission rate with their agent.
- Buyers could see a shift: The responsibility of paying the buyer’s agent commission might fall on them.
What Does This Mean for Your Financing?
While the exact impact remains to be seen, here are some potential scenarios for buyers:
- Increased Down Payment Needs: If you’re responsible for the buyer’s agent commission, you might need to factor that into your down payment calculations.
- Alternative Fee Structures: Some agents might offer flat fees or tiered commission structures, potentially making budgeting easier.
- More Transparency: The new landscape could lead to more upfront conversations with agents about their fees.
How to Prepare for the Change:
- Talk to a Mortgage Broker: Discuss potential financing options that consider the possibility of covering the buyer’s agent commission.
- Shop Around for Agents: Interview different agents and inquire about their commission structures
- Negotiate with Confidence: Be prepared to discuss fees openly and negotiate a rate that works for you.
The Bottom Line
The NAR settlement introduces a period of adaptation for the real estate market. While there might be uncertainties for buyers regarding financing, increased transparency and potentially more competitive commission structures could also emerge. By planning ahead and having open communication with your mortgage broker and agents, you can navigate this changing landscape and achieve your homeownership goals.