Under new rules, potential buyers may now be responsible for paying their agent’s commission. Some now question the need for that agent.
Less than two months ago, Joanne Y. Cleaver sold her home in a suburb of Charlotte for $725,000 in an unusual way: Facebook Marketplace.
She did not hire a real estate agent, lining up a lawyer instead to do the closing, and she declined to pay a commission to the buyer’s agent — a standard practice of the industry which for decades has put the burden of commissions of around 5 or 6 percent of the home’s sales price on the seller, though the fees were split between agents for the buyer and the seller. Ms. Cleaver, 66, estimates that she saved $25,000 in real estate fees, money that she pocketed.
Changes that alter the way real estate commissions are advertised and paid went into effect nationwide in August, and some people are touting the “death of the real estate agent.” Like Ms. Cleaver, some people are proposing that home buyers simply pay a flat fee to a lawyer to draw up the paperwork. No agent needed.
It’s a scenario that many real estate agents feared would be the consequence of a lawsuit brought against the National Association of Realtors by a group of homeowners who accused the powerful industry group of creating an unfair collusion between the seller and the buyer’s agents. For decades, fee paid to the representative for the buyer came out of the proceeds paid by the seller to their agent.
Now the two sides have been uncoupled, and people like Ms. Cleaver are going at it alone.
Though sellers can continue to pay for the buyer’s commission, it’s possible that some sellers may not, leaving the buyer responsible for a share of the commission. It’s an extra cost that could be especially burdensome for first-time buyers, who are already scraping together the down payment and the closing costs just to afford a home at a time when the cost of housing has hit a record high.
