BUFFALO, N.Y. -- The real estate industry, home buyers and sellers are currently waiting on a judge's approval of a settlement agreement reached last month.
The suit brought by sellers against the National Association of Realtors argued the current commission process violated anti-trust rules. NAR, with more than one million members, denies wrongdoing but agreed to pay $418 million and develop a new set of rules.
"We really think it will end up being very similar to what it is now, it will just be dealt with a little bit differently and there's been so many changes in real estate over all of the years that it's just kind of like another thing to adjust to," Towne Housing Real Estate Associated broker Kunji Rey said.
The Western New York-based broker believes many people in the general public are confused about exactly what the settlement does. For instance, she said there is misinformation about it eliminating a standard fixed 6% commission which has never actually existed.
Rey said commissions have always been and will remain negotiable.
"You see 1% being given, all the way up to 4% being given to the buyer's side. You don't necessarily know what's on the seller's side of it," she said.
Rey also rejected the notion from some analysts that the decision will vastly change the cost of buying a house in the United States. She said while there are many factors related to pricing, one generally trumps the rest.
"The supply and demand is really what drives it," Rey said. "Interest rates drive it to some extent but not as much as people would think."
She said the biggest tangible change people will see is in commission disclosures. The industry will no longer be able to list the buyers' commissions on the centralized Multiple Listing Service (MLS) it uses. Another new rule would require buyers and brokers to enter into a written agreement upfront.
"An agent gets to say my fee is this and this is why and this is what I'm going to do for you and this is my fiduciary duties to you so that's where that will get laid out very explicitly," Rey said.
There are still questions about how the settlement will impact the common practice of sellers paying both their and the buyers' commission fees and how it will impact out-of-pocket closing costs for buyers.
"I think in a lot of cases for marketing purposes, sellers will continue to offer commission. We're just going to have to dig deeper, make more phone calls," Rey said.
She believes, ultimately, the new rules can benefit brokers and agents, many of whom she said pride themselves on being ethical, hardworking and transparent. The industry expects the new rules to be in place this summer.
Rey said the timeline and exactly what the rules will be are still uncertain because there are a lot of moving parts. She said federal, state and local governments also have their own rules that will have to either be factored or adjusted.
For instance, she said there are concerns about low-income buyers being priced out because of closing costs. The Veteran Administration Homebuyers Program also bars participants from paying anything toward realtors fees which could become a proble.