Twin Cities home sellers hope to save on real estate commissions

When news broke about the National Association of Realtors (NAR) settlement, many home sellers called their real estate agents wondering: Am I off the hook to pay you?

Why it matters: The status quo is that sellers typically pay a 5-6% commission , which is split between the buying and selling agents.

Catch up quick: Sellers can continue offering to pay both broker fees, but according to the settlement , buyers should be compensating their own brokers.

Between the lines: Some home buyers, particularly first-timers , will balk at paying a broker fee, on top of a down payment and other costs.

What they're saying: Offering to cover that fee could help close a deal, but sellers might not want to pony up — especially if they're purchasing a new place, Twin Cities real estate agent Joey Oslund tells Axios.

• Most of his clients are both buying and selling their homes, which is why he thinks "ultimately, almost no" sellers will pay a commission to buyer brokers.

Sellers should offer no more than 2% of the home sale price to the buyer in concessions, according to Steve Brobeck, a senior fellow at the Consumer Federation of America.

• The buyer can choose to use those funds to compensate their agent, or pay out of their own pocket.

Reality check: According to a 2023 NAR report , 15% of consumers didn't know they could negotiate the commission. That share doubles (31%) among younger buyers, ages 24-32.

• Some companies have ditched agent fees altogether, like Kris Lindahl Real Estate in the Twin Cities. Others charge a flat fee, such as Golden Valley-based Home Avenue.

What's next: By Aug. 17, the database brokers use will no longer include offers of compensation.

• "[Change] will take place slowly, and unevenly, with lots of confusion," Brobeck tells Axios.

The big picture: Selling a house is costly, and commissions are generally the largest expenses .

• Brobeck says he expects the NAR settlement will bring commissions down closer to 4% of the home sale price.

Zoom in: Closing costs also eat into a seller's bottom line. In Minnesota , those fees average about 3% of a home's purchase price, according to Clever Real Estate, a national online brokerage.

The bottom line: The settlement opens the door for sellers to start keeping a little more profit in their pockets.