SACRAMENTO, Calif. — Buying and selling a home in California is about to look very different. Changes are coming to agents’ commissions starting in mid-July.
“Once the dust settles, this is going to be good for consumers,” said Green Haven Capital owner and mortgage broker, Kevin Oto. “All that’s happening is that buyers’ agent commission is a negotiable rate now.”
In March, the National Association of Realtors announced it would settle a major lawsuit accusing them of artificially inflating commissions. It means the standard 5-6% fee we expect to pay realtors would be gone.
“Starting July, those commissions are no longer going to be published in the MLS for a buyer’s agent. It doesn’t mean a buyer’s agent cannot still be compensated by the seller; it just has to be negotiated,” said Oto.
So how does it save you money?
As it stands now, let’s say you sell a home for $483,000 – the average price in Sacramento, according to Zillow. With a 6% commission, the seller would pay around $28,000 split between the buying and selling agents.
For the same situation in Roseville where the average home price is $643,000, you could pay more than $38,000 in commissions.
In Stockton, the fees would be around $26,000 for the average $441,000 home.
The settlement means those fees would go down, but will it impact the home price?
“We have a very strong market here in Sacramento. I think demand is going to set the price,” said Oto.
As for the realtor side, what changes could they experience?
“I think real estate agents are really going to have to get better. They’re going to have to elevate their game, elevate their service, elevate their expertise to really distinguish themselves,” said Oto.
Supporters say the lawsuit empowers sellers to feel like they should have more control and encourages home buyers and sellers to negotiate the commission rate with their agents.
“I think things are going to work out just fine. I think commissions are going to be a lot less than what they are right now. I think buyer’s agents may make a little bit less commissions. But overall, it’s going to have a benefit to the consumer,” said Oto.
There are still some unknowns. Right now, when you buy a home, there are a lot of out-of-pocket costs outside of the home loan like appraisals, credit checks, titles and inspections. It’s unclear if the new buyer agent fees can be financed.
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