Reforms will alter the real estate transactions in Illinois and elsewhere

(The Center Square) – Changes are coming later this summer that will alter how real estate transactions are handled in Illinois and around the country.

For decades, the National Association of Realtors required home sale listing brokers to provide an offer of compensation to a buyer’s agent up front. That usually was a 6% split between a seller’s broker and buyer’s agent.

Groups of home sellers brought lawsuits against the NAR for its standard commission structure, saying it was a violation of antitrust laws. The NAR settled the case for $418 million.

“Coming up in August, the sellers will no longer be obliged to offer credits for a buyer’s agent,” said Nick Pisano with Clever Real Estate. “It’s something they can do but it’s not something they’re required to do anymore.”

A Clever Real Estate survey shows that 71% of real estate agents believe the ruling will have a negative impact on the industry. Of the agents who believe the settlement will have a negative impact, 88% think it will discourage first-time buyers from entering the market.

“Opponents say if a seller chooses not to compensate a buyer’s agent, first-time buyers or others could be stuck paying potentially thousands of dollars more to have to compensate their own agent out of pocket,” said Pisano.

What effects the changes will have on the Illinois real estate market remain to be seen. Illinois Realtors’ sales forecast for June, July and August suggests an increase on a yearly and monthly basis for both Illinois and the Chicago area.

Some predict home prices may come down. In Illinois, the median price of a single family home was about 9% higher in May compared to May of last year. The annual median sales price for a home in Illinois last year was $269,000.

Clever’s survey also showed that 95% of agents expect the new commission structure will cause agents to leave the industry.

“When you’re having to get buyers to sign an agency agreement before you even get started, that is a little more difficult and time consuming for agents who only do a couple deals a year,” said Pisano.