Selling a Home Might Soon Cost You Less. Here’s Why

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It can cost a lot of money to sell a home. Read on to see why sellers may soon be in for relief. [[{“value”:”

It’s more than possible to sell a home without enlisting the help of a real estate agent. But that doesn’t mean selling a home on your own is easy.

If you’re not well-versed in negotiating with buyers and their agents, you could end up getting in way over your head. And you may not have the time to market your home and respond to multiple offers while also holding down a job. That’s why so many home sellers inevitably turn to real estate agents for help, despite the costs involved.

It’s common to pay real estate agents a commission in the course of selling a home. In recent years, 6% commissions were common. That’s because sellers have historically been on the hook for paying not just their agents’ commissions, but covering the cost of a commission to the associated buyer’s agent.

But a big reason for that boils down to the rules established by the National Association of Realtors (NAR), which represents more than 1 million Realtors. And soon, those rules may be changing for the better.

The cost of selling a home could drop

The NAR was recently sued by a group of home sellers for violating antitrust laws — namely, by setting rules that led to inflated industry-wide commissions for Realtors. (For clarity, a Realtor is a licensed real estate agent who belongs to the National Association of Realtors. All Realtors are real estate agents, but not all real estate agents are Realtors.)

The NAR just settled that suit by paying out $418 million in damages and eliminating the rules it had previously established with respect to commissions. The most notable change is that going forward, sellers will not have to pay both their agent and their buyers’ agents a commission for selling a home. Rather, sellers will be able to simply pay their own agent alone.

Furthermore, agents should now be able to lower their commission rates to drum up business. The result? A more competitive housing market, and one that could leave sellers and buyers paying less.

Everyone stands to win

TD Cowen Insights says that for the average-priced American home sale, sellers are paying more than $25,000 in agent fees on a $417,000 base price. This change could cause that fee to fall to $6,000 to $12,000.

At first, it may seem like sellers are the ones who will win in light of this development. But this change has the potential to benefit home buyers, too.

If sellers don’t have to spend as much to sell their homes, they may not have to charge as much for their homes. These days, buyers are facing a double whammy of expensive mortgages and elevated home prices. This change won’t drive mortgage lenders to lower their rates, but it may cause sellers to lower their listing prices, leading to better affordability for buyers.

All told, the NAR’s settlement has the potential to really open up the housing market in a positive way. Realtors may soon be in a position where they can opt to lower their commissions to entice sellers, which may benefit both parties (sellers pay less, and Realtors get more business).

To be clear, the NAR has not proposed a suggested commission structure as part of its settlement agreement. But the days of the standard 6% commission may soon be behind us, and that’s a positive thing overall.

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