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How Changes in Real Estate Transactions Could Affect Sellers and Buyers

Republished from Spectrum News One. To read original article click here.

COVINGTON, Ky. — The National Association of Realtors agreed to make some policy changes in order to resolve multiple class-action lawsuits brought on behalf of home sellers across the U.S.

Because of this, the cost of hiring a real estate agent to buy or sell a home could soon change.

One Kentucky realtor said he’s concerned these changes could make it harder for people to buy a home.

Jesse Brewer, licensed real estate broker with CAP Real Estate and Boone County Commissioner, has been working in real estate for 20 years. In that time, he’s charged fees all across the spectrum, based on the complexity of the deal and transaction size.

Changes to potential broker commissions have him worried about agents and buyers, he said. 

“A lot of those folks, they save up, they get their 3.5% down payment, they got their other closing costs they've got to pay," Brewer said. "You got your appraisal; you got this, you got that. A lot of times, sellers will pay those, but it’s baked into the cost."

"But you got someone that’s barely got enough to get into a home because they want to start building their own wealth and creating that. Well, now, they've got to negotiate a commission. So you’re going to have a lot of real estate agents that may not even want to represent buyers or represent first-time home buyers because who wants to work for free?”

As part of a settlement, the NAR agreed to change its rules so brokers who list a home for sale can no longer include offers of compensation for a buyer’s agent. It’s meant to address the complaint that homeowners are being forced to pay inflated agent commissions when selling their home.

Plus, the current rules could lead to buyers’ agents not wanting to show their clients homes that have lower commissions. The NAR also agreed to require agents to enter a written agreement meant to ensure buyers know what their agent will charge them.

“Real estate agents do work hard," Brewer said. "There’s a public perception they barely do anything. And if you’re doing all that back-end work and there’s a chance that if you’re working with a first-time home buyer and they can’t pay you because now they have to negotiate a commission, are you going to be apt to gravitate away from that?”

While the changes could help lower the cost for sellers who typically cover the commission for the buyer's agent and their own, Brewer said it’s already hard to buy a home with interest rates through the roof.

“Now we have another layer of complexity: how do they pay their real estate agent?” he said.

He added he’s also concerned about how the changes will affect the ability of veterans to buy homes.

“They are restricted from (Veterans Affairs) policies to pay a commission as a buyer,” Brewer said. “So now, because of this settlement and the buyers negotiating directly, what are we going to do about our veterans?”

Brewer works mostly in small commercial real estate, but he said he hopes there are safeguards in place for the sake of people trying to find a place to live.

These changes will go into place in mid-July. Meanwhile, the Department of Justice will reopen an investigation into the NAR and its policies, reversing the decision on a 2020 settlement.

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