Big changes are happening real estate and it will impact how buyers handle real estate commissions. Why? In March 2024, the National Association of Realtors agreed to pay $418 million and change its rules to settle a lawsuit over agents' commissions.
What's changing?
The way things always worked in residential real estate, the seller paid all the sales commission. As a percentage of the final sales prices, the standard total commission was 6%. This was typically evenly split, 3% to the seller's brokerage and 3% to the brokerage representing the buyer. So the buyer never had to worry about paying any sales commission, their share was paid by the seller, although one could argue it was factored in to the selling price.
And now?
The seller is no longer obligated to pay both shares of the sales commission. Sure, the seller can offer to pay a portion or all of the buyer agent commission as part of the offer negotiation, but they're under no obligation. This is quite similar to a commercial transaction.
Sales commissions offered no longer have to be a percentage. They can be a flat fee, which means a commission is fixed even when a buyer bids over asking price.
Buyers may be responsible for paying some or all their share of the commission.
Buyers may now find themselves balancing what to negotiate as part of the Agreement of Sale and what to negotiate as part of the Agent Agreement.