How will settlement affect sales of homes?

The National Association of Realtors’ proposed antitrust settlement will end buyer’s broker commissions being communicated over the local Multiple Listing Services in the months ahead.

This seismic business shift is like the 100-year flood.

How are buyers’ agents going to be paid? Nobody works for free. In case you missed the big news, the national trade group was hit with a class-action verdict that said it was price-fixing commissions. Instead of paying out a $1.8 billion judgment, NAR settled for $418 million and said it would prohibit sellers from offering compensation to buyers’ agents through a Realtor-affiliated home-listing database.

This creates a buyer’s conundrum. Below are some avenues likely to evolve.

Buyers’ agents will call ahead to the listing agent to find out if a buyer’s side commission is being offered. The agents may require the buyers to sign an exclusive buyers’ brokers agreement.

The available inventory of homes for sale is as tight as a drum and has been so since the pandemic days. Locating a home to buy, and receiving professional representation, are important.

But signing an exclusive buyers’ side agreement, effectively locking oneself into one agent, may or may not be something a buyer will want to do. Buyers might commit if it’s a particularly sharp agent. Otherwise, why box yourself in? says the many buyers I’ve talked with.

Wealthy buyers can just pay their agents directly. Low-wealth buyers will be hard-pressed to come up with the down payment, closing costs, inspection fees and pay a buyer’s agent, say, 1% of the sales price or some preset amount like $4,000.

What other choices likely to evolve and become available to buyers are certainly a horn of plenty.

Online search engines and transaction platforms are sure to evolve. Think Amazon or Costco.