The $418M Realtors settlement and its effect on Treasure Valley housing market

The National Association of Realtors reached a settlement last month that, if approved by a judge, will eliminate the standard 6% commission Realtors have been awarded upon closing home sales, according to the Associated Press.

Under the proposed settlement, the National Association of Realtors agreed to pay $418 million to compensate homeowners and to resolve multiple lawsuits that alleged that the group’s rules propped up agent commissions, the Associated Press reported.

Sellers typically pay the commission — which is split between the agents who represent the buyer and seller. For a $100,000 home, a 6% commission would amount to the seller paying out $6,000 of the sale price as a sort of closing cost.

Typically, a 6% commission would be split evenly between the listing agent, who works with the seller to sell the home, and the buyer’s agent, who works with the buyer to buy the home. Essentially, the buyer’s agent and the seller’s agent would each get 3%.

However, it’s unclear exactly how much impact the settlement will have on the local housing market.

“If it does affect the price of the house, it’s going to be a very, very small margin,” said Brett Hughes, broker and owner of Boise Premier Real Estate.

With this settlement, sellers could try to change the typical commission split, whether that’s paying less than 6% or trying to move some costs off of themselves.

Initially, for example, Hughes said some sellers might try to push for the buyer instead to pay the buyer’s agent. But buyers deal with so many costs already, like the down payment and inspection costs. If that happened, Hughes said, buyers might forgo hiring an agent.

“That doesn’t serve anybody,” Hughes said. “I personally don’t think we’re going to see that here in Idaho because I think people understand the relationship ... when you’re doing a seller representation agreement with the seller, they sign how much they’re paying to the buyer’s agent and ... the listing agent.”

There’s “major” uncertainty with its impacts, Hughes said.

All commissions are negotiable, Boise Regional Realtors President Elizabeth Hume said. Idaho also has a buyer representation agreement that she said protects the agent and buyer.

“It will make agents have to work a little bit harder at what they do,” Hume said. “... If you’re a real estate agent, you need to learn how to negotiate your fee and express your value to a client or consumer.”

Buyers should keep negotiating the way they’ve always been able to, Hume said.

“We’ve had a lot of changes and there’s really no crystal ball to see what’s going to happen,” Hume said. “It hasn’t been finalized by a judge.”