How new commission rules affect Tampa Bay real estate sales
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Illustration: Natalie Peeples/Axios
Real estate brokers may have to sing for their suppers now that new commission rules have taken effect.
Why it matters: That could prove especially tough for what Business Insider calls the country's "glut of mediocre Realtors," including amateurs and those whose services might not be worth the price to homebuyers.
Catch up quick: The National Association of Realtors (NAR) no longer allows agents to advertise commission rates in the Multiple Listing Service (MLS) — the database where real estate agents post homes for sale.
- Buyers will now bear the burden of ensuring their agent gets paid and must sign a compensation agreement before an agent can show them listings.
- The changes are expected to reduce real estate commissions; they've already fallen a bit since the settlement was announced in March.
How it used to work: Sellers and their broker negotiated a commission (most often 5%-6%), which the broker then split with the buyer's agent. The buyer's agent's portion is what was advertised in MLS.
- The seller would pay both agents from home sale earnings.
Reality check: Under the new rules, a seller can still choose to pay for the buyer's agent through negotiation, and many sellers will choose to do so because it will expand the pool of interested buyers.
Zoom in: About three of every 1,000 workers in Florida are real estate agents. That's higher than any other state in the nation.
- In Tampa Bay, the average commission percentage paid to buyers' agents hasn't budged much so far.
- It stood at 2.43% in July, a 0.05 percentage point drop since January, according to Redfin.
The big picture: Industry veterans expect the changes to weed out lackluster agents.
- Steve Brobeck, a senior fellow at the Consumer Federation of America, tells Axios that nationwide, commissions could drop to as low as 1% to 1.5% per agent on each side.