Real Estate Commission Changes: What Sellers Need to Know
See real estate commission changes that impact your home sale. New rules are the result of a court settlement by the National Association of Realtors.
If you’re planning to sell your home, you’ve likely heard about the recent real estate commission changes. Historically, sellers were expected to cover both the listing agent’s commission and the buyer’s agent’s commission, typically totaling 5%-6% of the home’s sale price. However, a landmark court settlement involving the National Association of Realtors (NAR) has reshaped these long-standing practices.
Now, buyers are responsible for paying their own Realtor fees unless they negotiate otherwise. This shift means sellers are no longer automatically on the hook for both agent commissions. But what does this mean for you as a seller?
This brief post will break down these changes, how they affect your bottom line, and what you need to consider when listing your home in today’s real estate market.
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What are the recent real estate commission changes?
The NAR settlement has fundamentally altered the way real estate commissions are handled. A federal court determined that the NAR’s long-established agent commission structure infringed on antitrust laws. The court found that the association’s policies and mandates pressured home sellers into paying a fee that could be paid by the buyer.
In the settlement, NAR agreed to make changes designed to provide more transparency in real estate transactions and give buyers greater control over their representation costs. Here’s a breakdown of what’s changed:
- Buyers are expected to pay their own agent fees: In the past, sellers typically covered both the listing agent’s and buyer’s agent’s commissions. Under the new rules, buyers are now responsible for negotiating and paying their own agent fees, unless they reach an agreement with the seller to cover some or all of the cost.
- Sellers are only required to pay their listing agent’s commission: Instead of paying a combined 5%-6% commission, sellers are now generally responsible for only the listing agent’s fee, which averages around 2.5%-3%.
- Negotiation remains an option: Sellers and buyers can still negotiate commission payments, meaning sellers might still offer to cover the buyer’s agent fee in certain situations to attract offers.
