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Breaking Down the Broker Fee Changes

Breaking Down the Broker Fee Changes

Estimated reading time: 3 minutes

The Settlement

The next time you buy or sell a house, you might pay significantly less in broker fees.

Last Friday, the National Association of Realtors (NAR) agreed to settle a class action lawsuit and, as part of the deal, agreed to eliminate rules mandating sellers pay brokers’ commissions, pending court approval.

What’s Changing?

Prior to this, 6% commissions split between buyers and sellers brokers were the norm, amounting to tens of thousands of dollars for the median U.S. home. But following the settlement, sellers will no longer be on the hook for both fees, but will only be responsible for paying their own agents.

The bottom line is this: The transaction component of homebuying should get cheaper. Sellers could shop around for better rates, and buyers could forgo using brokers altogether.

Some estimates predict this settlement will cut agent fees by up to 50%, driving them as low as 1% of the closing price per agent. But it might not all be bad news for brokers. Agents will also have more flexibility with how they can market their services. For example, they could charge a lower commission, an hourly rate, or a flat rate per listing.

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