Twin Cities home sellers hope to save on real estate commissions
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Illustration: Natalie Peeples/Axios
When news broke about the National Association of Realtors (NAR) settlement, many home sellers called their real estate agents wondering: Am I off the hook to pay you?
Why it matters: The status quo is that sellers typically pay a 5-6% commission, which is split between the buying and selling agents.
Catch up quick: Sellers can continue offering to pay both broker fees, but according to the settlement, buyers should be compensating their own brokers.
Between the lines: Some home buyers, particularly first-timers, will balk at paying a broker fee, on top of a down payment and other costs.
What they're saying: Offering to cover that fee could help close a deal, but sellers might not want to pony up — especially if they're purchasing a new place, Twin Cities real estate agent Joey Oslund tells Axios.
- Most of his clients are both buying and selling their homes, which is why he thinks "ultimately, almost no" sellers will pay a commission to buyer brokers.
Sellers should offer no more than 2% of the home sale price to the buyer in concessions, according to Steve Brobeck, a senior fellow at the Consumer Federation of America.
- The buyer can choose to use those funds to compensate their agent, or pay out of their own pocket.
Reality check: According to a 2023 NAR report, 15% of consumers didn't know they could negotiate the commission. That share doubles (31%) among younger buyers, ages 24-32.
- Some companies have ditched agent fees altogether, like Kris Lindahl Real Estate in the Twin Cities. Others charge a flat fee, such as Golden Valley-based Home Avenue.
What's next: By Aug. 17, the database brokers use will no longer include offers of compensation.
- "[Change] will take place slowly, and unevenly, with lots of confusion," Brobeck tells Axios.
The big picture: Selling a house is costly, and commissions are generally the largest expenses.
- Brobeck says he expects the NAR settlement will bring commissions down closer to 4% of the home sale price.
Zoom in: Closing costs also eat into a seller's bottom line. In Minnesota, those fees average about 3% of a home's purchase price, according to Clever Real Estate, a national online brokerage.
The bottom line: The settlement opens the door for sellers to start keeping a little more profit in their pockets.