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The traditional way of buying and selling central Ohio homes will undergo a change this summer, though the extent of the change remains to be seen.
In an effort to settle an antitrust lawsuit, the National Association of Realtors announced Friday that it will prohibit sellers’ agents from offering to compensate buyers’ agents through the Multiple Listing Service, the primary portal of homes for sale. The Columbus Realtors organization followed suit and said it will enact new rules in mid-July for its 9,000-plus members.
The agreement is likely to spell an end to the traditional practice of home sellers paying commissions for both the seller’s and the buyer’s real-estate agents. In central Ohio, the commission is often 3% of the sales price to each. A seller, for example, would pay a total of $18,000 ($9,000 to agents on each side) on the sale of a $300,000 home. If a buyer isn’t represented by an agent, the seller typically would collect the full 6% commission.
Critics have long argued that the current system elevates home prices by keeping the commission full, even if only one side is represented by an agent. The typical commission on an Ohio home sale is 6%, according to Clever Real Estate. That’s significantly higher than most other countries, such as the U.K. (1.3%), the Netherlands (2%), Germany (4.5%) and France (5.5%), although slightly below Japan and Argentina, according to the Wall Street Journal.
Critics also argue that under the current system, buyers aren’t independently represented since their agents are paid by the seller.
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While the new rule prohibits sellers’ agents from offering to compensate buyers’ agents through the MLS, it does not prohibit sellers from paying buyers’ agents if they independently make that arrangement.
“The offer of compensation will be prohibited from being in the MLS,” said Columbus Realtors CEO Brent Swander. “That does not mean the seller still cannot offer compensation to the buyer’s agent but they would do it outside the MLS.”
Because of that, agents remain unclear about the ruling’s true impact in the real world.
“We’ve got brokers who still don’t understand what’s going on,” said Andrew Show, owner of Buyer’s Resource Realty Services in Worthington, which represents home buyers.
Nonetheless, Show, Swander and others expect the NAR agreement, which must still be approved by the court, to change the home search process, especially for buyers. Starting in July, Columbus Realtors will require agents who are representing buyers to have a signed agreement with buyers explaining their compensation, instead of merely relying on sellers to pick up a pre-determined tab.
The requirement will force buyers to arrange a price with their agent, or allow them to forgo altogether an agent, and any cost that comes with it.
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Steve Nicastro, a content team leader with Clever Real Estate, based in St. Louis, said Clever expects the ruling to lead to lower commissions for buyers’ agents, down from the current average of 2.66% to between 1.5% and 2%, potentially saving thousands of dollars for buyers.
Nicastro said he also expects buyers’ agents to start offering varying prices for different services such as showing homes, negotiating prices, providing a price analysis, etc.
“A buyer might pay for ala carte services,” he said. “The ability to pick and choose which services you need, this is likely to make that more common.”
Show’s firm, Buyer’s Resource Realty Services, already offers clients a range of prices based on services provided, and Show expects sellers’ agents will continue to work with buyers’ agents on compensation.
“If I’m the seller and can’t offer compensation to buyers agents, what’s going to happen? Nobody’s going to show my house.”
jweiker@dispatch.com
@JimWeiker
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