After a lawsuit that accused real estate agents of price fixing to maintain high commissions was settled, the industry was expecting big changes.
But agents and experts locally say the impacts are muted.
It’s been a few weeks since the National Association of Realtors settled a major lawsuit that some said could upend the way buyers and sellers do business.
But now that we’re seeing the changes in reality, local experts say the impacts aren’t as big as originally advertised.
In the US, real estate agents were making a commission of between 5 to 6% of a sale price in a house sale.
That’s a lot higher than the commissions made by agents in other countries.
Tom Larson is the President and CEO of the Wisconsin Realtors Association.
He explains that now realtors are required to enter into an agreement with prospective homebuyers, but Wisconsin has had buyer agency laws on the books for decades.
“There's a slight tweak just in the settlement agreement, and that's kind of what happens when you try to create a standard that applies in all 50 states,” explained Larson.
The other big change was related to commissions and a seller’s offer of compensation to a buyer’s agent.
Under the previous model, a seller would often offer to pay a buyer's agent their commission if the seller accepted the offer from the buyer.
Now under the settlement agreement, you can no longer offer that commission through the multiple listing service or MLS, the computerized catalog of all homes for sale.
Critics hope that will make the market more competitive, since it’s harder for buyer’s agents to select homes from the MLS based on how much they’d get paid in commissions.
“The practice change doesn't prevent a buyer from- doesn't prevent a seller from- paying a buyer agent's commission. It only prohibits them from putting it in the MLS. So if you're a seller and you're willing to pay the buyer's agent's commission, there's no change whatsoever,” explained Larson.
Chad Albrecht is the owner, broker, and realtor of Local Living Realty in Laona.
“We can't advertise it anymore. But once there's representation from both parties, then they both, you know, once there's an offer and getting accepted, then both parties talk to each other and say, ‘Okay, what you know, what are you offering?’” said Albrecht.
He said the impacts were built up, but that things haven’t really changed.
“It just scared a lot of buyers and sellers that, ‘hey, I'm going to have to-’. It's not really, shouldn't change that much, to be honest with you is what we're finding out. So buyers are still going to be able to have representation,” he said.
People with FHA loans or other loans without a large down payment are potentially impacted.
“That could affect FHA loans or how much somebody could afford, but nothing in the practice changes prevents the seller from offering to pay a buyer's agent, if they aren't going to and the buyer has to pay it themselves, then it could affect FHA loans, or it could affect how much a buyer can afford to pay for a home,” explained Larson.
Overall, Larson says that thanks to Wisconsin’s already strong consumer protection and buyer agency laws, changes aren’t as deeply felt.
