Real Estate Agent Commissions And You

What's Going On

Lawsuits against the National Association of Realtors (NAR), a trade group that represents many of the nation's real estate agents, and major brokerages over how homes are bought and sold in the US have been going on for years. In March of 2024, these groups lost a class-action lawsuit. These lawsuits have alleged anticompetitive behavior, particularly focusing on NAR rules that dictate how brokers share commissions. Plaintiffs argue that these rules stifle competition and inflate costs for consumers. One significant lawsuit, filed by the U.S. Department of Justice, challenges NAR's policies on commission structures, asserting that they limit consumer choice and drive up prices. These legal actions have sparked debates within the real estate industry about the need for greater transparency and competition in commission practices.

Are real estate agent commissions going away because of a lawsuit?

The short answer is No. If you employ someone for a service, they most likely expect to be paid whether you're using an agent to buy or sell in Austin. The truth is that the commission a buy-side or sell-side agent makes has always been negotiable, although there are standards in place in many markets. The recent lawsuits against the National Association of Realtors (NAR) and several large brokerages allege collusion to inflate commission rates. Plaintiffs argue that the traditional model, where seller-paid commissions are split with buyer's agents, artificially elevated costs. What is likely changing is how buyers, sellers, and their agents advertise and arrange compensation for representation.

There remains much uncertainty for real estate professionals, lenders, and consumers as to what changes will occur, and when they will go into place. If you’re planning to buy or sell a house in 2024, talking to a real estate advisor, and ideally several, will help clarify a confusing situation.

Do I need a real estate agent to buy or sell a house?

Also No! Just as you do not need a lawyer to file paperwork with the court, having a professional work with you on your journey is optional. Most agents are happy to have a conversation at your convenience to answer questions and demonstrate their value. If you don’t find value in their services, you should seek answer elsewhere. A good agent should do more than send you links to houses and open doors.

The expertise of a buyer's agent remains a significant asset in the home-buying process. For instance, an agent's negotiation skills can save buyers thousands by securing a lower purchase price or by negotiating for repairs based on inspection findings. Additionally, agents offer invaluable guidance through complex contractual paperwork, reducing the risk of errors or omissions that could be costly. They also provide market insights that can identify emerging neighborhoods with potential for appreciation, or suggest properties that meet specific investment criteria, leveraging their comprehensive understanding of local market trends.

Do real estate agents make 6% commission?

Again, No! In Austin, Texas, and any other market, there are likely no real estate agents that make 6% Gross Commission Income (GCI) per transaction. With many single-family home transactions, there’s a Seller’s agent and a Buyer’s agent, and in total their commissions may equal 4-6% of the transaction, with the agents agreeing to share the total percentage. 

Conclusion

In Austin's vibrant real estate market, the support of an experienced agent is more crucial than ever. Whether it's identifying the right property, navigating bidding wars, or ensuring a smooth closing, David Bean’s real estate expertise can be the key to a successful and satisfying home purchase in 2024.