What's happened to real estate commissions since the big settlement
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Real estate commissions have fallen a bit since March, after the announcement of a landmark settlement that could reshape the housing market.
Why it matters: This is just the start. In less than two weeks, new rules regarding commissions are set to take effect, and fees are expected to fall further.
Catch up quick: Right now, if you're selling a home you pay about 5% or 6% in commissions, half to the agent who helped you sell and the other half to the buyer's agent.
- Sellers list the commission rate on offer to buyer agents in an industry database, the Multiple Listing Service. Starting Aug. 17, the MLS will no longer show that rate.
- The change is part of a deal that the National Association of Realtors reached to settle a class action lawsuit filed by home sellers.
The big picture: Commission rates have been falling (slowly) for decades, as buyers have gotten savvier about asking for deals and technology has demystified home shopping.
By the numbers: The average buyer agent commission fell to 2.55%, from 2.62% at the beginning of the year, according to an analysis from Redfin of the 50 most populous metro areas in the U.S.
- Reality check: Though commission rates ticked down, the actual dollar amount buyers' agents took in over this period increased a smidgen — to $15,377 from $15,259. That's because home prices were still going up over this period.
The bottom line: Homebuyers might be able to save at the margins on commissions after the change goes into effect, but high house prices (and mortgage rates) are likely a bigger hurdle to clear.
- What to watch: It may be tricky to figure out what happens to these numbers after August; some MLS may no longer track these numbers.
