It's been two months since the National Association of Realtors reached a settlement that some predict will upend the way homes have been bought and sold across the United States for decades, but the housing market will continue to grow in a year. As the country enters its busiest season, the ripples are spreading across Colorado.
Although the details are still being worked out, Colorado real estate agents are already noticing changes to the way they pay. Deciding how much to pay an agent seems like it will soon become another consideration in a difficult housing market.
“We're definitely seeing a little bit of a shift where people are asking, 'Should I actually pay a buyer's agent?'” said Brett Weinstein, a real estate agent in Denver.
The settlement came in response to an antitrust lawsuit that accused the Realtor Association of keeping brokerage fees artificially high. For decades, sellers have paid agent fees for both themselves and the buyers. The rate offered to the buyer's agent will be posted with the listing. This effectively sets the default fee to 5-6%.
Real estate agents are quick to point out that commissions are always negotiable. That's technically true, but making it public makes it harder to negotiate lower rates. After all, if a seller advertises that the buyer's agent is paying less for a house a block away, the agent may be less likely to take the client on a tour of the home.
The settlement, scheduled to take effect in July, prohibits listings from including fees for buyer's agents. In theory, this would lower commissions by making it easier for sellers to pay lower commissions or avoid paying commissions at all to the buyer's agent.
test the market
Weinstein said Colorado sellers are testing the market to see what would happen if they lowered their fees. Buyer agents in and around Denver have typically collected 2.8% over the years. Weinstein said he has seen an increase in people putting their homes on the market in recent months, paying the 2.5% fee.
So what does a Colorado real estate transaction look like in cash terms? In Denver, the state's largest real estate market, the median home price is currently $602,550, according to the Denver Metro Association of Realtors. Using that data point as a benchmark, the lower fees save you about $1,800 over a typical real estate transaction.
“I wouldn't say it's something large enough to shake up the entire industry,” Weinstein said. “We've known for some time that these commissions were negotiable, but more has happened.” [lower] Commission provided by either the seller or the listing broker. ”
There has been much speculation about how the settlement will ultimately play out. Shana Schmidt, a real estate agent with Madison & Company Properties in Denver, said many homeowners are confused about what that means for them.
“We talked about what is happening with all the buyers and sellers in either the promise of the exhibition or the consultation with the buyer, and all the truth and all the truth of what people are listening to. We educate about misconceptions,” Schmidt said. He said. “What we found…is that many people have heard it. Few people have great concerns, but those who do have concerns that they believe are true. I have pretty strong opinions about it.”
One possible scenario is that if the seller no longer feels the need to do so, the buyer will end up paying their own agency fees. At first glance, it seems like a good deal for someone who is comfortable scouring online listings and negotiating on your behalf.
May be challenging for first-time buyers
Still, buying a home is often the biggest purchase a person will make in their lifetime. It's not a process that anyone is comfortable going through alone. Real estate agents argue that putting the burden of paying brokerage fees on buyers will hurt those who can't afford to pay them out of pocket.
That will make it even more difficult for first-time buyers who are already struggling to get a foothold, Schmidt said.
“High-end buyers [afford it]But do we want to exclude first-time and second-time homebuyers who may not have the funds? ” Schmidt said.
Matt Mecalf of Mile High Home Pros says some buyers may be tempted to decline representation or cut corners, but it's not in their best interest. Maybe, he said.
“They either skip having someone represent and coach them, or they're very hesitant to talk to them because they want to pay the lowest possible rate,” Metcalf says. .
simple calculations
Real estate agent commissions are a bit vague in the current system. Buyers don't have to worry about how their agents are compensated. For sellers, it's built into the price.
“That's because you're not writing a check,” Metcalfe said. “If you go to a lawyer, they'll write you a check. Look, here's your bill and this is how much you owe.”
That may be about to change. But Metcalf says the math should be simple.
“At the end of the day, all that matters is, 'Does the buyer or seller want help?'” Metcalf said. “If you don't, then you shouldn't pay anyone at all. Or find someone who you think is getting paid what they deserve.”
