The way homes are bought and sold in the Dallas-Fort Worth metroplex may change if a $418 million settlement reached by the powerful National Association of Realtors last week holds up.

The settlement changes several rules that lawsuits allege forced sellers to pay artificially inflated prices to sell their homes. It could mean the end of the 6% commission. The agreement must be approved by a federal judge.

The NAR will no longer require a broker advertising a home on the Multiple Listing Service to list or offer any upfront compensation to a buyer’s agent. Offers of compensation can be made outside of the MLS platform, but the home’s seller must disclose the arrangement.

Lawsuits against NAR alleged the requirement to post an offer on the MLS reduced competition.

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For decades, the standard has been this — a seller pays 5% to 6% commission of the home’s sales price. That commission is split between the seller’s and buyer’s agents.

Real estate agents have argued that commissions have long been negotiable. A survey of 630 Texas real estate agents in December 2023 found that the average commission was 5.73%, according to Clever Real Estate.

The Dallas Morning News spoke with several real estate experts to discuss how buying and selling a home in the metroplex might change due to the settlement.

Here’s what they said.

More agents for buyers and sellers could offer flat service fees instead of waiting until the end of a transaction.

Experts offered differing opinions on the likelihood of that change.

Jim Fite, president and CEO of Century 21 Judge Fite Co. in Dallas, one of the region’s larger residential real estate firms, told The Dallas Morning News Friday that putting a price on such specialized knowledge would be difficult.

Some brokerages may offer flat fees, but no real estate company has ever made it work, he said. Customers haven’t been willing to pay the price.

“It never has been taken hold,” Fite said.

Hava Johnston, owner of The Johnston Home Team in Plano, said more agents for buyers and sellers will likely offer flat service fees. Instead of waiting for payment until a home is sold, a buyer’s agent could charge for each showing.

The practice will become more mainstream, he said.

“They’re going to have to figure out how to establish value for their services to their clients. And if the compensation isn’t coming from the other side, then it’s going to have to come from their clients,” Johnston said.

The trade group also agreed to require agents or others working with a homebuyer to enter into a written agreement with them. That is meant to ensure homebuyers know what their agent will charge them for their services.

Steve Brobeck, Senior Fellow at the Consumer Federation of America, told The Dallas Morning News that both buyers and sellers will be able to negotiate commissions in “a more transparent marketplace” as a result of the settlement.

“Required buyer agent contracts, in particular, will result in conversations between many buyer agents and prospective buyers about agent fees,” he said.

The result? Savings for consumers.

“Moving from a marketplace with rates which are essentially fixed at 5-6 percent to a more competitive one will lower commissions, which will become more diverse,” Brobeck said in an email. “We estimate that, eventually, agent commissions will decline by 20 to 30 percent, saving consumers tens of billions a year.”

Johnston warned that sellers who don’t offer buyer agent commissions could see their homes sit on the market longer and sell for less. First-time buyers may also be negatively affected if they don’t have funds to cover the commission.

Now faced with covering the costs of their own agents, some buyers may opt not to use one.

However, Sriram Villupuram, an associate professor of finance and real estate at the University of Texas at Arlington, points to one European country as evidence that people will still use brokers despite changes.

“In the United Kingdom, 70% of people still use a broker, so that’s not going to go away. “That hasn’t gone away despite the emergence of technologies such as online marketplaces that offer a flat fee-based listing and so on and so forth,” he said Friday.

There may be fewer real estate agents in the D-FW market once the new rules are in place.

Johnston said he estimates a quarter of the agents who have licenses that expire between July and October will not renew.

“We pay the NAR,” she said. “We pay the MLS. We pay a lot of money to be a realtor, and all of a sudden, those costs aren’t going down but now our compensation is going down. A lot of agents aren’t going to be able to make it work

“See the exploding can of worms,” he continued. “That’s all it is. Put them all back in the can. It’ll be fine, eventually. It will settle down. Good agents will make it. Others will find different things they are now better suited for.”

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