On August 17, new rules around real estate commissions rolled out, and consumers — and even many agents — are awash in confusion. Here is how the conversation has changed:
Before August 17, 2024: It was common practice for the home Seller to pay both their own listing agent’s and the Buyer agent’s commission. (It should be noted that these commissions were always negotiable between a Seller and their agent). So when anyone talked about this figure, both those commissions were included in one number. This allowed Sellers — and sometimes their attorneys — to “shop” around for commissions.
After August 17, 2024: Now, a Buyer and their Agent are responsible for negotiating the Buyer’s Agent commission. That is not something a Seller’s agent is involved in, unless it is negotiated as part of an offer on the home. The Buyer could ask for the Seller to pay the commission, or to make other concessions that would offset the cost. On the other hand, if Buyers choose to go unrepresented, they could conceivably hire a lawyer to draw up the terms of the offer, or they could pay an agent a flat fee.
Bottom line: If you are interviewing listing agents and ask them what their fees are, the figure the agent quotes may seem low. That’s because it’s only one side of the commission coin.
It’s likely that future litigation will further reshape the real estate model to which we are all accustomed. I will continue to keep you updated as practices evolve.