If you employ a realtor to assist you in buying or selling a property, they get compensated through the typical real estate commission. However, a recent federal case has modified consumer negotiations and real estate agent payments.
The National Association of Realtors decided to alter the guidelines regarding realtor compensation for buyer and seller representation after a class action lawsuit was settled. This applies to all the US states, including Colorado.
So, what are the new realtor compensation changes? Is there any opportunity to bargain over this fee or the related closing costs? Below, we answer any questions you may have about real estate commissions.
In the past
Before, the buyer and the seller’s agent would get a full commission for their services. In other words, the property’s seller would often pay a real estate agent in Denver, CO, in the range of 5% to 6%. That usually compensated the buyer’s and seller’s agency fees, with the money divided between the two agents.
Currently
As of August 17, 2024, home sellers are no longer automatically obligated to pay both their own agent and the buyer’s agent. Alternatively, buyers may need to pay their own agents individually if they choose representation.
Under the new structure that NAR agreed upon in the settlement of the lawsuit, listing agents will no longer mention the buyer’s agent’s commission when a home is up for sale. Rather, the buyer and their agent will separately negotiate that charge.
Additionally, the seller is now expected to discuss the amount of compensation they are willing to give their agent for their efforts. This gives the buyer and seller a great deal of leeway in negotiations.
As a result
As more agents get comfortable offering various forms of compensation, more consumers will compare prices and bargain for lower commissions in a more open market.
As a seller, one thing to think about is that less commission could translate into less promotion for your home. This is because the majority of a property’s marketing funds come from the agent’s commission.
Additionally, that can restrict the amount of potential customers that sellers are able to draw in. Some agents and buyers could be less inclined to tour a property if they don’t know ahead of time whether the seller is willing to assist with any fees.
These new regulations will affect younger or first-time purchasers who might not have extra money on hand. Before, a lot of young or inexperienced purchasers were already struggling to come up with enough cash for a down payment, moving expenses, and other expenses. Those same individuals now need to be ready to pay more in additional fees for their agents.
Summing up
Sellers used to typically cover the costs of the buyer’s and seller’s agent. Now, the buyers shall be obligated to pay their agent’s fees due to the implementation of the new NAR’s settlement. On the other hand, you, as the seller, can decide to pay the buyer’s brokers. For what reason would you take this action? To draw more attention to your listing and increase its appeal to potential buyers.
