A transformation in the dynamics of the real estate market began to take effect in the country last weekend. With the change in the shared-commission system, under which property sellers were required to pay between 5% and 6% of the sale price to cover the fees for their agent and the buyer’s agent.
This fair change has left real estate agents and the companies they are registered with on edge. It stems from the more than $1.8 billion fine that the National Association of Realtors (NAR) had to pay after losing a lawsuit filed in Kansas, in which other companies were also sued for inflating commissions on property sales.
The class-action lawsuit set a precedent in the industry because it focused on the interaction between agents and clients. It was based on the argument that the anticompetitive rules required, until now, that home sellers also pay a commission to the buyer’s broker. This was considered unethical by the plaintiffs, as it also tied the sale of a property to a series of financial compensations that had to be paid to promote it on one or multiple listing services—something some plaintiffs also viewed as
A monopoly.
According to NAR’s records, as of January this year, there were over 1.55 million registered real estate agents nationwide. It is estimated that more than two million are licensed but do not belong to the NAR, working independently or not primarily engaged in the real estate market.
Florida is the state with the highest number of registered realtors or real estate agents, exceeding 225,000, who are primarily concentrated in cities with the highest demand and supply. This makes the market highly competitive, though not necessarily more competitive in terms of fairness.
The new rules require the market to reinvent itself, to be more equitable, and to prioritize clients, who are the ones driving the buying and selling process.
Although the change had been announced since late last year, the new rules surprised many agents who are now fearful. Under the new system, they could lose significant commissions, and attracting clients may become even more difficult.
The dynamics will be different, and there will now be flexible negotiations between sellers, buyers, and their respective agents. This will also mean that those in the industry must become more competitive when seeking clients and advising them through the process.
For most homeowners looking to sell or those wanting to buy, sifting through thousands of listings will no longer be such a costly headache. Undoubtedly, they will prefer to hire a professional agent with whom they can negotiate the commission, making the process easier and more effective.
There is no need to fear changes that demand more equitable, ethical, and competitive professional practices. So, welcome them and put them into practice.
By: Omaira Martinez
Colombian journalist
Image: Aarp
