Let’s assume the seller is no longer required to pay the buyer’s agent, what is the impact to the real estate industry? There are two scenarios, and one is much more damaging to the industry. It could be that NAR does not require that a seller offer a commission, but they still can if they think that is in their best interest. In this case, fundamental change to the industry may take years or not even have a large impact. Sellers will find it in their best interest to continue to offer a commission publically to attract the greatest number of buyers. They will choose to offer a healthy commission to the agent who represents the buyer. This is what has occurred so far in Washington, where they change their MLS rules last year. Properties are represented in generally the same fashion as before.
But to appease the Federal Trade Commission (FTC), the Department of Justice (DOJ) and the judges for these lawsuits if settlements are agreed to, NAR may decide to prohibit any commission from being offered on the MLS. In this case, a buyer may request the seller to provide a credit to pay for their agent rather than coming out of pocket for their commission, but the seller is not obligated to agree. The commission is just as negotiable as including furniture in with the sales price.
This would have a much bigger impact on the industry. Most new agents work with buyers since they are inexperienced and at a competitive disadvantage to much more established agents who dominate the listings in the market. On a $800,000 sale, will a buyer be willing to pay a novice real estate agent $16,000 to assist with the purchase? On a $10,000,000 sale, will a buyer be willing to pay their agent $200,000? Perhaps not. They may be willing to pay them less, or by the hour, or even bypass having their own agent and just work directly with the listing agent. We don’t think working with the listing agent is a good idea, they have a fiduciary duty to the seller. But we do think paying a flat fee to your agent is a great idea.