Upending an industry or small changes?
It may be in the eye of the home buyer or seller.
Realtor associations have changed rules on how agents and their clients talk about how, and how much, those agents get paid.
The standard 5% or 6% real estate commission has been traditionally split between the agent representing the seller and the agent representing the buyer. Realtors say that commission always has been negotiable. However, it was a requirement to include a compensation field in listings in order for a home or condo to be included in a local association's Multiple Listing Service, the database listing most homes for sale. The field could be left blank, but it rarely is.
But no longer thanks to terms of a national legal settlement with the National Association of Realtors.
The impact on Florida's real estate industry remains to be seen. No state has more skin in the game of how real estate agents are paid than Florida. The association used to publish monthly membership statistics by state but stopped earlier this year. The most recently available data from early 2024 indicated Florida had more than 220,000 realtors.
Miami is home to the largest regional Realtor association. The third largest includes Broward and Palm Beach counties.
What are the changes?
The changes are over how realtors get paid helping people buy and sell a house or condo.
First, an agent’s commission can no longer be listed on the MLS — the Multiple Listing Service. That’s the database where most homes and condos for sale appear. Previously, MLS required listings to include a compensation field, even if a seller was not offering a commission to a buyer's agent.
Second, if you are buying a house and working with an agent, you will have to sign an agreement with your agent about how they will be paid.
How significant are these changes?
Folks in the real estate industry in Florida have been downplaying how big these changes are. That may be understandable considering how many people make a living or have a side hustle as a real estate agent.
"These are the changes we are faced with and we need to embrace and lean into this and not try and circumvent the rules," said President of the Broward, Palm Beaches and St. Lucie Realtors David Serle. "Our job is to make sure that it's more transparent and to protect the consumer going forward, even more than we had in the previous years," he said.
"These are the changes we are faced with and we need to embrace and lean into this."Broward, Palm Beaches and St. Lucie Realtors
The Florida Realtors group emailed WLRN, "We have developed and rolled out new forms that incorporate these changes to help our members and consumers continue to successfully navigate the complex process of buying or selling a home with confidence.”
" I see the changes as really positive," said Ines Hegedus-Garcia, immediate past chairman of the Board for Miami Realtors.
Consumer Federation of America cautions home buyers, though. "These two new rules require changes in agent practices that may confuse consumers, in part because many agents will try to preserve seller compensation of buyer agents to maintain 5-6 percent overall commissions," it wrote in a news release.
What could be the impact of these changes?
The big unknown is how it could change paydays for agents. For decades, the common way agents got paid was by splitting a sales commission, which was usually 5% to 6% of the sales price of the home or condo. This was the cooperative commission and it was included in the listing of the house.
READ MORE: Major legal fights over longstanding commission practices may upend Florida's real estate business
A big lawsuit argued that the industry conspired with this fee but the National Association of Realtors, and David Serle with the Broward Palm Beaches group says it was always negotiable. "I can't remember the time when I met with a seller or a buyer where they said, 'Hey, will you take this? Will you do this? Will you credit back to me? Will you buy me a refrigerator?'" he said. "There's always been something that we've been able to negotiate into a deal that an agent and or broker has done," Serle said.
Negotiating a new kitchen appliance or over closing costs may impact what an agent makes on a deal, but that is not the same thing as negotiating the underlying commission percentage.
Could this mean agents are paid less?
It may. It sets the stage for a more robust negotiation over compensation.
"I don't think there's any fear of compensation going down or who pays or not getting paid," said Hegedus-Garcia.
She thinks the new rules will spark a "value-driven conversation of what does the realtor bring to the equation."
Serle, her counterpart in Broward and Palm Beach counties, thinks "there's going to be pressure on commission percentages."
So what does this mean for buyers and sellers?
It could mean that nothing changes. Sellers still could offer commissions to their agents and the agent bringing in the eventual buyer.
But it's all up for a more transparent negotiation. Buyers now have to have a written agreement with their agents, which should spell out how their agents get paid.
Why did this all happen in the first place?
Several federal lawsuits were filed against the National Association of Realtors arguing its compensation rules for agents were illegal. The trade group signed a settlement in March that requires it to make these changes and pay over $400 million in damages. NAR continues to deny any wrongdoing.
But it isn’t a done deal just yet. A court hearing for the final approval is scheduled in November.
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