YOUNGSTOWN, Ohio – Real estate professionals don’t anticipate major changes will result from a proposed settlement with the National Association of Realtors. That doesn’t mean, however, that agents won’t need to make the case for the value of their services.
Provisions of the $418 million settlement announced in March await a judge’s approval, which is expected midyear. Proposed changes include how real estate agents are paid at the end of a transaction and new agreement requirements for homebuyers.
“The main impact will be that buyers will now be required to sign a buyer agency agreement to purchase, just as a seller has already signed a listing agreement to sell,” says Samantha Aldish, a real estate agent with Keller Williams Chervenic Realty in Salem and president of the Youngstown Columbiana Association of Realtors.
“Nothing has really changed as far as commissions go,” adds Arden Lingenhoel. He is a broker with Cutler Real Estate’s Alliance office and president of the Stark Trumbull Area Realtors. The only thing that might change is how real estate agents are paid at closing. Most of the time they are paid through the seller but there are times when the buyer pays.
“Just like when we list the house, we write up a contract between us and the sellers. We’re going to be writing up a contract between us and the buyer,” Lingenhoel says.
“This proposed settlement has not affected our market as of yet and I don’t think it will change too much in the beginning,” Aldish says. “Over time, this would impact buyers the most.”
Commissions have always been negotiable, according to Aldish and Lingenhoel. Agents’ biggest concern is having the conversation with buyers that they might pay the commission if the seller won’t offer any concessions, they say.
Buyers will be “educated heavily on what a buyer’s agent does for them and how an [agent] is compensated in exchange for their professional services,” Aldish says. “The buyer agency has always been disclosed in our area and how the buyer agent was compensated was that the seller paid a commission amount to the listing agent. If another agent brought the buyer, the commission was split with that agent.”
One focus for agents is getting them to do more in terms of “expressing our value in the transaction,” Lingenhoel says. Real estate agents are hired, she says, because they “know how to run the transaction [and] what’s involved.
“Every time we go out on an appointment, whether it be to sell a house or to take a buyer around looking at houses … it’s a job interview. And we’ve got to look at it that way and explain to them,” she continues. “This is the job. This is why we’re qualified to work for you. But I don’t think it’s going to make a huge impact.”
In advance of the expected change this summer, brokerages already are requiring buyer agency agreements, says Patrick Burgan, owner and broker at Burgan Real Estate. The change in how commission is paid will have the biggest effect on first-time homebuyers because they often have just enough money for the down payment. Many who use Veterans Administration loans, which don’t permit them to pay any additional fees also will be affected, Burgan says.
“I’m sure there’s going to have to be even further reform in the financing-lending industry,” he says.
“I’m sure there are going to be objections from the class action attorneys and things like that,” Lingenhoel adds. “On paper right now, it seems to be a proposal that folks are in agreement with.”