Billings Realtor Association says $418M settlement creates opportunity

Many questions regarding the real estate business loom following a recent massive, $418 million settlement, which will make commissions for real-estate agents and brokers negotiable.

The settlement was reached between the National Association of Realtors and a group of home sellers frustrated with the association's pricing rules, and it could cause significant changes in the business when it goes into effect this summer.

Even with those concerns, Amber Parish, the CEO of the Billings Realtors Association, an affiliate of the national association, said the changes will create opportunities for both real estate agents and their customers.

"I think it's just going to be different," Parish said Tuesday morning. "The negotiation portion is what is changing, but we just really don't know at this point what this is going to mean for the industry."

The settlement will change protocol that has been in place for decades. For years, Americans have paid a standard commission of around 5 to 6 percent when selling a home, which is split between agents.

While the settlement has been signed off by both parties, it still requires approval from a federal judge before taking effect. That's expected to take place in July, which would eliminate the requirement of a 6 percent commission. Housing experts believe this will force down the overall cost of buying a home.

"That's kind of the prediction that's out there, but that's more of a media prediction," Parish said. "If this is accepted through the courts it's going to be a change, for sure. We just don't know what yet."

Parish said it's too early to tell if housing prices and agent commissions will drop, but admitted there are uncertainties going forward.

Housing experts say they expect the new system will lead to increased competition among agents, which could force many to lower commissions. Parish said this could emphasize the importance of brokers and agents being more transparent with clients.

"Realtors, when they are putting in their listing, and others when they are showing property will know exactly what the commission split is," Parish said. "If anything, it's going to enhance the relationship Realtors have with the consumer."

The settlement will likely create challenges for those hoping to enter into real estate. If the commissions shrink, the volume needed to make a full-time income will force many to pursue other careers.

Parish said the housing market in the Billings area is always active with properties to sell.

"There's always buying and selling going on," Parish said. "So, we just adapt as an industry and make changes when we need to. We'll address the issues as they come along."