ST. LOUIS — Realtors across the US are preparing for a massive change on Aug. 17 to the way it's done business for a century.
The changes are part of a $418 million dollar settlement earlier this year made by the National Association of Realtors and federal regulators to eliminate informal rules that have existed within the traditional payment structure. The changes essentially get rid of the five or six percent commission that's usually split between the buyer's and seller's agents.
At the end of the day, realtors say it changes little but mandates more transparency. And, it also requires a lot more paperwork.
"It's not really going to change the way that we practice," said Karie Lyn Angell, realtor with Coldwell Banker Realty Gundaker. "It breaks down what a buyer is going to pay and what a seller is going to pay in the overall commission structure."
Angell said a buyer is already paying a lot of fees from closing costs, down payment, insurance, escrow and title fees. Now they'll have an option on whether they want to pay certain commissions.
"So they have a box that says, 'Don't show me any houses that I'm going to have to pay that commission'--I can't afford it," said Angell. "So unfortunately, if a seller isn't wanting to pay commission, it is highly likely that they're going to make their buyer pool a lot smaller."
The intent was to make the process smoother and potentially bring down home prices or help first-time home buyers. Critics of the change don't believe that's what will actually happen. If someone doesn't want to pay commissions, agents won't want to show certain houses, and home sellers may even list their homes for more money to make up the cost differences. Also, realtors say it won't protect home sellers from lawsuits when a sale goes awry.
Angell doesn't think the home prices will come down because there's still a supply and demand issue.
The big question is will the change be good for the long-term?
"We don't know exactly the long term yet," said Emmy Crawford, realtor with Coldwell Banker Realty Gundaker. "This all comes down to, you know, disclosure, additional discussion, and education to our clients."
If you want to see the full sit-down conversation with Angell and Crawford, you can watch it here.