Editor’s Note: This story has been updated to correct Evian White de Leon’s title and clarify the new dynamics between home buyers, sellers and realtors.
(NewsNation) — Changes to real estate commissions go into effect Saturday, following a $418 million settlement between homeowners and the National Association of Realtors.
Homeowners said they were forced to pay artificially high commissions when selling their homes, and the result is a shift in commission structure.
Some real estate companies have already started implementing the new rules, which are the first change to commissions for agents in three decades.
Under the new system, sellers will no longer have to offer upfront to cover the cost of the buyer’s agent, and those buying a home will now negotiate directly with their realtor about the fees.
Previously, sellers would usually pay the commissions for both the selling and buying agent, typically 5 to 6% of the purchase price, which can add up when the average home price is around $400,000.
But things have already been changing, with the typical seller paying just a little over 2.5% of the home price for a commission, down from 2.6% in January, according to real estate brokerage company Redfin.
Evian White de Leon, the chief legal counsel for Miami Realtors, told NewsNation there are certain questions people should be asking when thinking about buying or selling their home.
“How are you going to represent me? What’s that agency agreement look like,” she said. “How are you going to be compensated? Can you give me a reference list of clients? If I sign a contract with you, is your broker available? How are you going to support me?”
Another change is that listings will no longer advertise the buyer’s commission up front to prevent realtors from steering clients away from homes with lower commissions.
The Wall Street Journal reports that brokerages will have to adapt to survive, adding that the decline in real estate commissions could be very painful for some brokerages that are working with thin margins in areas that have been hit by the slow housing moment.
Some agents in areas where the rules have already been implemented said there has been some confusion, but experts recommend buyers and sellers do their research and ask questions when selecting an agent and making sense of the new system.