The Seller’s Agent Has Historically Paid the Buyer’s Agent

For years, homebuyers have enjoyed the benefit of not having to pay their real estate agent directly. Instead, the seller’s agent would typically pay the buyer’s agent a portion of their commission, which is usually around 5% to 6% of the home sale price. This system has been the norm, but significant changes are on the horizon.

Real Estate Listings and Commissions May Change Soon

On March 15, 2024, the National Association of Realtors (NAR) proposed a set of rule changes to settle lawsuits over real estate commissions. These changes, set to take effect in mid-July 2024, could dramatically alter how commissions are handled in real estate transactions.

• Buyers’ commissions won’t be listed on the MLS.
• Buyers’ agents will require a signed buyer representation agreement.

These changes could lead to a shift in who pays the buyer’s agent and how much they get paid, potentially affecting home sale prices.

What Might Happen in the Future?

While the new rules don’t prohibit the seller’s agent from splitting their commission with the buyer’s agent, the commission split would have to be negotiated off the MLS. This could lead to a scenario where the seller and buyer each pay their respective agents.

Agent fees could now be determined in several ways for homebuyers:

• Percentage of the sale price: Buyers might pay a percentage of the sale price or negotiate an arrangement that aligns their goal of paying a low price with the agent’s commission.
• Flat fee: Buyers pay a flat amount to an agent to help them with the entire process.
• A la carte fees: Buyers pay a fee to one or more agents to help with different parts of the process, such as seeing a home, preparing an offer, and receiving assistance with the closing process.
• Seller concessions: Sellers might offer to cover some or all of the buyer’s agent’s fee as a concession.

How these changes will affect the cost of buying a home isn’t completely clear. Fee negotiations on both sides could lead to lower commissions and home prices. However, buyers might need to come up with extra cash for their agent, making it more challenging for first-time, low-income, and underrepresented buyers to purchase a home.

Do You Need a Real Estate Agent to Buy a House?

While you don’t necessarily need a real estate agent to buy a home, most buyers still prefer to use one. According to the NAR’s 2023 Profile of Home Buyers and Sellers, about 89% of buyers used an agent. An agent can help you find a home, understand the process, and negotiate the price and offer.

When choosing a real estate agent, consider asking about their process, experience with the area and type of home you want, and their compensation.

Preparing to Buy a Home

Finding an agent is only part of the homebuying process. Regardless of whether you’ll pay the agent, you need to prepare for other upfront closing costs and the ongoing monthly cost of having a mortgage.

Your credit history and scores could play an important role in your mortgage options and costs. Check your credit report and take steps to improve your credit before buying a home.

Contact O1ne Mortgage for Your Mortgage Needs

At O1ne Mortgage, we understand that navigating these changes can be challenging. Our team of experts is here to help you every step of the way. Whether you’re a first-time homebuyer or looking to refinance, we offer personalized mortgage solutions tailored to your needs.

Call us today at 213-732-3074 for any mortgage service needs. Let O1ne Mortgage be your trusted partner in achieving your homeownership dreams.