PENNSYLVANIA, USA — If a recent settlement is approved by federal courts, homebuyers may have to foot the bill for real estate agents, which could put pressure on realtors to stay in business.
A $418 million agreement from the National Association of Realtors is paving the way for a new set of rules that may rock the real estate industry, affecting sellers, buyers and agents.
“If their seller is not going to offer compensation and the buyer has to pay that in addition to their closing costs and their down payment, they’re going to have some additional fees," said Sam Stein, a broker and relator Inch & Co. "So, for those buyers, it will cause a bit of a challenge for them.”
Sellers would no longer have to make a compensation proposal to pay a prospective buyer’s agent.
Another new rule would make homebuyers have to sign a deal with an agent before they start working with one and agree on how much they will pay for their services.
Some relators say they expect these changes to make thousands of agents go out of the market. But Stein says he’s not worried.
“I’ve been through all sorts of cycles and processes that have changed. I think consumers still want representation whether you’re a seller or a buyer, " Stein said. "You still want somebody who’s an advocate for you.”
Stein also said he thinks these new rules will have a limited effect on his business, but other relators may have to increase their value to keep up with the times.
Sellers can still make an offer to increase closing costs to help pay relator fees but if they choose not to, the homebuyer will be responsible for paying the fees out of pocket.
Stein thinks this may put some pressure on relators to lower their fees. Alongside inflation and high interest rates, buyers say it’s going to be a tough choice on whether they want to hire a realtor.
"These new rules will definitely impact me and will impact my future and will impact how I plan for the future financially," said Sophie Freeman, a future homebuyer. “But I still do see a lot of value in using a relator despite those fees.”
Stein says that if these new rules go into effect, homebuyers could run the risk of signing bad contracts, failing to ask for inspections, and losing money.
The new rules will be put in place in mid-August, ahead of the court's final review in November.