The Realtors settlement could change how agents work with homebuyers
The Realtors settlement could change how agents work with homebuyers
The real estate industry is still chewing over the news from a few weeks ago that the National Association of Realtors agreed to pay $418 million and change its rules to settle several lawsuits accusing the organization, and several big brokerages, of conspiring to artificially inflate commissions. One of the biggest changes could require that homebuyers have written contracts when they employ an agent and pay that agent directly.
While the settlement is still pending in the courts, real estate agents are already trying to decide what it means for them. “Marketplace” host Amy Scott spoke with Amanda Pohlman, Realtor and broker at Keller Williams Living based in the greater Cleveland area, about what the changes might mean for her.
The following is an edited transcript of their conversation.
Amy Scott: Tell me how you reacted when you first heard about this settlement.
Amanda Pohlman: I think same reaction as a lot of us that are professionals in this industry, both Realtors and brokers. I think there was a lot of shock, and then kind of business as usual. And, you know, overall, we have a lot of changes in our industry. And, you know, here’s another one.
Scott: If the settlement is approved by the court, how’s it going to affect how you operate?
Pohlman: So I think one thing that is going to change, and probably has already for a lot of us, is making sure that we are using written agreements for buyer agency. So all along, when we listed a home with a seller, there was a listing agreement and that was signed by the seller. And the commission, which is always and always has been negotiable, was also signed by the seller. The use of buyer agency agreements, which are specific to working with a buyer, I wouldn’t say that all agents were using them. And so this is now going to be mandated. And I think it’s a great opportunity for us to have more clarity and transparency for the things that we do for our clients when we represent them as buyer’s agents.
Scott: So traditionally, the seller has paid the commission to both their own agent and whoever buys the house, their agent, right? They’ve advertised a commission on the MLS, the multiple listing service, and that commission has been split. If the buyer now has to pay their own agent’s commission, I mean, do you think they will? Or do you think we’ll see a lot of people trying to buy a house on their own, unrepresented?
Pohlman: Yes, I think this is one of the big concerns in the industry is, what’s going to happen for buyers that simply cannot afford to pay their buyer’s agent? And it’s already competitive enough for the first time homebuyers, the Veterans Affairs buyers, when they are bidding against other buyers who might have cash or have gobs of, you know, resources because it’s already a very challenging market with very low inventory and a lot of buyers wanting the same house.
Scott: Well, let’s talk about the market because when we last spoke a couple of years ago, Cleveland was seeing a bit of a slowdown because just of affordability. High, high prices, high mortgage rates. Have things picked up a bit?
Pohlman: Yes. So Cleveland has, since COVID, had a seller’s market, which has steadily got stronger and stronger. Obviously, higher interest rates made it not as appealing for so many buyers because when we had the lower interest rates, of course, there were lots of buyers. Now there’s low inventory, and the interest rates might be a little bit higher, but there are certainly buyers out there and they want homes and they are competing. And there’s so few homes, probably less than I’ve ever seen. So we are seeing multiple offers, prices going way over asking, and then at the end of the day, a lot of sellers are choosing cash offers. And it doesn’t look like it’s going to let up.
Scott: How do you think this settlement, and the market really with low inventory, fewer transactions recently, is going to affect your business? Do you see some real estate agents leaving the industry?
Pohlman: I would think so. I sit on boards and I run a lot of masterminds and lots of discussions around it. I think there’s some fear, especially around agents that work with a lot of buyers, because working with buyers is probably typically what a lot of agents at least start their business doing. I think strong listing agents or agents that typically have a lot of listing inventory are not feeling anything but probably excited. So it’s going to be mixed, but I think there will be quite a few people that do decide this change is much too difficult. Because there’s a lot of things ahead that are kind of unknown because obviously the settlement hasn’t actually been accepted. So we’re still a little bit in limbo here.
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