Tampa Bay realtors react to major shift in industry after settlement ends 6% commission rates
Tampa Bay realtors react to major shift in industry after settlement ends 6% commission rates
A major shift to the real estate industry is expected after the National Association of Realtors agreed to settle a series of lawsuits and eliminate the customary six percent commission paid by sellers. FOX 13's Aaron Mesmer reports.
TAMPA - A major shift in the real estate industry is expected after the National Association of Realtors agreed to settle a series of lawsuits and eliminate the customary six percent commission paid by sellers.
As part of its settlement, the NAR will pay $418 million and end so-called, "cooperative commissions," which have forced sellers to pay commissions for both their agents and the buyers' agents.
Instead, buyers will now be able to negotiate commissions on their own. Consumer advocates hope the changes will drive down commission rates and help home-buyers save money.
Dawn Cohen, a realtor who owns Premier Plus Realty in Sarasota, believes these changes are necessary.
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"I've been trying to push this for ten years without any luck and now, finally it's happened," Cohen said. "We want it to be more transparent and what the real estate industry has done is keep everybody at arm's length and saying it's for the good of the consumer when it's not."
Cohen believes the shift will also prevent some agents from steering families to sellers, offering higher commissions to both agents. "That to me is also not in the consumer's best interest. I show all the listings to my customer, and they pick the ones they want to see."
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The settlement goes beyond ending cooperative commissions, it also requires realtors to enter into written agreements with buyers, a process currently required in 18 states but not Florida.
"Coupling those two together, I think, will help us navigate through this new environment," said Ali St. Cyr, with Tomlin St Cyr Real Estate Services in Tampa.
St. Cyr, however, isn't convinced the new environment will help buyers and, instead, will force them to pay more money.
A family buying a $300,000 home, for example, would not have to pay an additional $18,000 or so up front or find a way to negotiate that cost into the price of the home.
"It is going to be a huge financial burden, in addition to already coming up with the down payment and closing costs, to pay for realtor commissions now," said St. Cyr, adding the industry likely won't know the full impact of the changes for some time. "I'm hoping in those coming months, we're going to have more clarity on the direction of some of these big question marks."
A judge still needs to approve the settlement. If that happens, the new rules would go into effect in mid-July.