What commission changes mean for homebuyers, sellers
Jeff Ostrowski BANKRATE.COM
The National Association of Realtors (NAR) agreed to new rules around real estate commissions as part of a lawsuit settlement in March. As of August 17, they’re actually rolling out — and consumers face a deluge of confusion and conflicting predictions.
One narrative predicts a coming utopia for homebuyers: A price war will erupt, and commissions will plunge amid a new wave of competition among buyers’ agents. A competing narrative goes in the opposite direction: Under the new commission structure, buyers will realize they’re on the hook for thousands and decide not to use agents at all. NAR, meanwhile, has portrayed the changes as minor tweaks rather than a major shift.
The opposing narratives underscore just how complex Realtor compensation has always been — and how much more complex it just got. Here’s a look at the new commission structure and what it could mean for both homebuyers and sellers.
How real estate commissions used to work
Traditionally, when a home seller hired a real estate agent to represent their listing, the seller agreed to pay a commission. The national average has been about 5% of the home’s sale price, typically split down the middle with 2.5% going to the listing agent and the other 2.5% to the buyer’s agent. (On a $400,000 home, 5% comes to $20,000, or $10,000 for each agent.)
Rocket Mortgage sues feds over discrimination allegations
Candice Williams
THE DETROIT NEWS
Rocket Mortgage is suing the federal government, seeking dismissal of a law suit that claims the Detroit lender discriminated against a Black homeowner who received an allegedly low appraisal when seeking to refinance her property loan.
Rocket Mortgage said Thursday that its federal lawsuit against the U.S. Department of Housing and Urban Development challenges what it calls inconsistencies between regulations that require appraiser independence and enforcement actions that hold lenders accountable for those appraisers.
Rocket Mortgage filed a motion to dismiss the Department of Justice’s lawsuit against the company, which it says is based on “the same regulatory conflicts and incorrect application of the law.”
“It is unreasonable that the DOJ chose to sue Rocket Mortgage for the conduct of an independent appraiser,” Bill Emerson, president of Rocket Companies, said in a statement Thursday. “We will not stand idly by while the courts are used as venues to leverage our company’s name to publicize the case instead of the pursuing justice against those who may have committed wrongdoing.
“Today’s filings highlight the conflict between HUD’s regulations and the DOJ’s enforcement positions. We are looking forward to laying out all the facts of this case in court. Rocket Mortgage has thousands of passionate team members who focus every day on doing the right thing. It would be an offense to our workforce if we let the DOJ’s and HUD’s wrongful actions go unchecked.”
The lawsuit follows a filing from federal prosecutors in October accusing Rocket Mortgage of discrimination after an appraiser allegedly undervalued a Black woman’s home, despite rising property values in her neighborhood.
Who pays?
Even this has been a bit murky. Agent fees came out of the seller’s proceeds at closing, but it’s reasonable to assume that the seller adjusted their price accordingly — the fees were baked into the home’s sale price. And so the buyer ultimately paid, just not directly to the agents: That extra 5% was rolled into the home’s sale price.
What’s changing?
The biggest change is that listing agents (the agents who represent home sellers) may no longer make offers of compensation to buy-side agents on any NAR-affiliated multiple listing service (MLS). In addition, a buyer’s agent must now have a written contract with a home shopper, clearly specifying their fee, before they may show that client a house. Until now, NAR encouraged but didn’t require written agreements between buy-side
agents and buyers.
A federal judge gave preliminary approval to the settlement in April 2024, and the final holdout among the brokerages named in the suit — HomeServices of America, part of Warren Buffett’s Berkshire Hathaway — also settled in April. The rules took effect August 17, and final court approval was granted November 26.
Compared to the old model, the new version offers a greater level of transparency for consumers — homebuyers now will be fully aware of how much they’re paying for an agent’s services. “It’s always good when people understand what they are and are not paying for,” says David Druey, Florida regional president at Centennial Bank.
An important aspect of the new model for agents: While the new rules prevent listing agents from posting buy-side commissions on the MLS, as they used to, sellers and listing agents still can agree
on the amount off the MLS. That means it’s OK to offer compensation amounts verbally, in emails or texts, and even on their brokerage’s own website, as long as it’s not done on the MLS.
“Although sellers can elect not to pay any buyer agent compensation, that doesn’t mean they will avoid the economics,” says Budge Huskey, president and chief executive of Premier Sotheby’s International Realty in Naples, Florida. “Buyers may easily write into any offer a contingency requiring that the seller cover the cost, or may request other concessions, such as closing cost assistance in the dollar amount they are paying their representative.”
Does this mean commissions are now negotiable?
Technically, real estate commissions always have been negotiable — a theme NAR long has stressed. Practically, though, the picture gets complicated. In many cases, Realtors are more skilled at negotiating than their clients, so the consumer comes into the negotiation at a disadvantage. What’s more, the buyer’s agent commission was previously determined by the seller, not by the buyer. The new rules shift that responsibility to buyers, who now will discuss compensation directly with the agents representing them.
Is this good or bad for consumers?
Until we see how things shake out over time, the answer really depends on who you ask. Some foresee a near-nirvana for consumers: Vishal Garg, CEO of mortgage company Better, predicts the settlement will unleash a “buy-
side price war” — buyer agents will begin competing for clients.
Others fear a darker turn. Ken H. Johnson, a real estate economist at Florida Atlantic University and a former real estate broker, says the new rules just add another layer of complexity to an already confusing process.
“No longer advertising buyer agent commissions will only create a more confused and drawnout transaction process as buyers, sellers and agents will have to negotiate the fee, who will pay for it and how much will be paid by each party,” Johnson says. “Due to this added level of complexity, buyers will almost certainly have to negotiate with more sellers before they find the deal they are satisfied with.”
Concerns for first-time buyers
Many in the real estate industry worry that first-time homebuyers — those who need expert guidance the most, and who are already severely hampered by high prices and high mortgage rates — will be priced out of professional representation. If commissions no longer come out of the seller’s proceeds, the thinking goes, buyers won’t have an additional $7,500 or $10,000 to pay an agent.
“Most of those buyers are scraping the barrel to the bottom to come up with a down payment,” says Dave Liniger, chairman and co-founder of RE/MAX. For now, buyers can’t roll commission costs into their mortgages under the new rules. But industry players widely expect the Federal Housing Finance Agency, overseer of mortgage giants Fannie Mae and Freddie Mac, to change those rules.
STATEOFHAWAIICOUNTYOFKAUAIINTHEFAMILY COURTOFTHEFIFTHCIRCUIT,5FDV24-0000050; PEYTOND.SILIADO,PLAINTIFFV.LORNAASAMBRADO SILIADO,DEFENDANTTAKENOTICEthataComplaint forDivorcehasbeenfiledintheaboveentitledaction andthatahearinghasbeensetforthismatterfor Tuesday,January21,2025at8:00A.M.(HST)atthe JudiciaryComplexlocatedat3970Ka’anaStreet, courtroomnumber1,Lihue,Hawaii96766,(808) 482-2330.Thenatureofthereliefbeingsoughtisas follows:DIVORCE.Youarerequiredtomakedefenseto suchpleadingsnotlaterthanforty(40)daysfromthe firstpublicationofthisnotice,anduponyourfailureto dosothePlaintiffwillapplytotheCourtfortherelief sought.Thisthe3rddayofDecember,2024.STACEY JOROFF,ESQ.,ATTORNEYFORTHEPLAINTIFFPOST OFFICEBOX936KILAUEA,HAWAII96754,(808) 828-0985. (TGI1476618 12/6, 12/13, 12/20/24)
REQUEST FOR PUBLIC COMMENTS FOR APPLICANTS FOR CHIEF JUDGE, INTERMEDIATE COURT OF APPEALS, STATE OF HAWAI‘I
InaccordancewiththeJudicialSelectionCommission Rule5,Section2:ConfidentialityA.asfurther amendedandeffectiveMarch16,2022,theJudicial SelectionCommissionannouncestheapplicants applyingforthejudicialofficeofChiefJudgeinthe Intermediate Court of Appeals, State of Hawai‘i. Thelistofapplicantsapplyingtofillthevacancyforthe judicialofficeofChiefJudgeintheIntermediateCourt ofAppeals,StateofHawai‘i,islistedasfollowsin alphabetical order:
James H. Ashford
Lance D. Collins
Daniel M. Gluck
Nickolas A. Kacprowski
Deirdre Marie-Iha
Karen T. Nakasone
Taryn R. Tomasa Gifford
Clyde J. Wadsworth
NOTICE OF SALE OF ABANDONED VEHICLE
InaccordancewithHawaiiRevisedStatutes§290-11, PohakuTowingLLC,locatedat5633KawaihauRd. KapaaHI,96746,willauctionthefollowing abandonedvehiclethathasbeenunclaimedformore than30daysafternoticewasmailedtotheregistered owner.
• Make/Model: LEXUS EH • Year: 2015 • Color: SILVER • VIN: JTHBK1GG3F2175818
Date of Sale: 12/9/2024
Time: 4:00PM Location: 5633 KAWAIHAU RD KAPAA HI 96746
Thevehicleisbeingsold as-is tothehighest bidder.Interestedpartiesmayinspectthevehicleat 5633KAWAIHAURDKAPAAHI96746from 3:00PM to 4:00PM on 12/9/2024
Foradditionalinformation,contactPOHAKUTOWING at 808-631-8177 or pohaku.cori@gmail.com (TGI1476902 12/06/24)
TheCommissioninvitesinterestedpersonstosubmit writtencommentsontheapplicantsapplyingforthe judicialofficeofChiefJudgeintheIntermediateCourt of Appeals, State of Hawai‘i.
PleasevisittheCommission’swebsitebelowtoview someofthequalitiestheCommissiongivesconsideration to under Judicial Selection Commission Rule 10. Pleaseincludeyoursignature,printedname,phone numberandemailaddressinyourcomments.All writtencommentswillbekept CONFIDENTIAL Writtencommentsmustbe postmarkedorfaxedno later than December 30, 2024 to:
Commission Chair Kamani B. Kuala‘au
Judicial Selection Commission State of Hawai‘i 417 South King Street Honolulu, Hawai‘i, 96813 FAX: (808) 538-5205
Website:
http://www.courts.state.hi.us/courts/judicial_ selection_commission (TGI147515411/30,12/2,12/3,12/4,12/5, 12/6, 12/7/24)
in theofficeofBureauofConveyancesorAssistantRegistraroftheLandCourt,StateofHawaiiandas amendedandwhichpropertyislocatedat 4970PepelaniLoop,Princeville,HI,96722. The TimeshareInterestasnotedontheNoticeofLien,whichhasbeenfiledagainsttherecordowneras consistsofdelinquentmaintenancefees,(plusinterest,latecharges,andcollectionandenforcement costs).Termsofthesaleare:(1)Noupsetprice.(2)Propertysoldwithoutcovenantorwarranty,express orimplied,astothetitlepossessionorencumbrances;(3)Atthecloseoftheauction,Purchasershall pay100%ofthehighestsuccessfulbidprice(“Bid”)bycertified,orcashier’schecktoFIRSTAMERICAN TITLECOMPANY;providedthattheAssociationmaysubmitacreditbiduptotheamountofthesecured indebtedness;(4)Purchasershallpayallclosingcostsincluding,butnotlimitedto:costsofdocument drafting,notaryfees,consentfees,escrowfees,conveyancetax,recordationfeesandothercharges, togetherwithanyspecialassessmentswhichmayariseunderHRS514B-146(g)(h)(i);(5)Iftitleisnot conveyedtoPurchaserforanyreason,otherthanPurchaser’sfailuretoperformasspecifiedherein,the Association’ssoleresponsibilityshallbethereturnoftheBidfundstenderedbyPurchaser.ThePurchaser shallhavenofurtherrecourseagainsttheAssociationoritsagents,attorneys,servicersandauctioneers; (6)ThesalemaybepostponedfromtimetotimebypublicannouncementbytheAssociationorsomeone actingonitsbehalf;(7)BysubmittingtheBid,Purchaseracknowledgesreadingthetermsandconditions setforthinthisnoticeandagreestobeboundtherebyandsignawrittenacceptanceofalltermsherein. Forfurtherinformationregardingthissale,youmustcontact WyndhamVacationResorts,Inc.,a Delawarecorporation at (800)251-8736. ConductorofthepublicsaleinthestateofHawaii:AQUA LEGALLLConbehalfof,FirstAmericanTitle,agentforClaimant;Phone:(808)539-7504;Address:1099 AlakeaStreet,suite2430,Honolulu,Hawaii96813.BatchNo: ForeclosureHOA144106-BHV136HOA.Schedule“1”:LienRecordingDateandReference:10/29/2024;Inst:A9068000567; TimeshareInterest(ContractNo.),Owner(s);000630900397,RonaldAlbertCahilland MyungsookLee;000630906543,CarolJeanneWanless;000630913614,GonzaloVaqueraSaldana andEstelaBotelloSaldana;000630916757,MaryElizabethBehrens;000631019791,KeirraNoelle MaherandRichardLeighMaher;000632100637,DavidMarkSkillings;000870906690,RandyG. NixonandZemulaD.Robison;000870909033,TannisLayneRusnack;000871000816,LewisK. SchlumbrechtandYvonneM.Schlumbrecht;000871003430,CrystalR.ZakharovandJoshuaT.Peck; 000871004107,KristinaLongandDerekLong;000950811208,JosephPabloPantojaandDawnLynn Pantoja;000951004118,LewisKentSchlumbrechtandYvonneMarieSchlumbrecht;000951008010, JuliusTaylorandOlondaBailey;001150713584,MaryJaneBrunner;001150800738,FrancesW. AshleyandRobertN.Ashley;001150818458,LorettaJ.FraccalvieriandFrankJ.Fraccalvieri; 001150904852,JeffK.LongandJenniferLong;001150911451,WilliamH.Riley,Jr.andPatriciaA. Riley,TrusteesandthesuccessortrusteesoftheRileyFamilyTrust;001150912905,ChigakoKambeand MichikoAkihama;001151015278,KozoSugimotoandKeikoSugimoto;001151015625,DavidAnthony BealeandEvaBeale;001151016276,RebeccaA.CorcoranandGlennE.Corcoran;001151103231, GeorgeT.NoldeandMaryK.Nolde,trusteesoftheGeorgeT.NoldeandMaryKathleenNoldeRevocable LivingTrust,DatedMarch1,2006;001151105913,KathleenR.TischnerandDavidJ.Tischner; 001151109378,BerniceSuenRivera;001151112562,JaneE.Peak;001151208204,JoeRoddy CastilloandJackieKayCastillo;001151211216,RichardA.Lehman;001151216546,BeatriceM. Kolman;001151311495,RobinM.OransandPeterH.Wasserburger;001151501681,GregoryC. LindsayandJudyS.Lindsay;001151602711,HelenaGertrudeO’BrienandGregorySeanO’Brien; 001151611027,MarjeanH.HugheyandLannyR.Hughey;001151703840,DonaldS.Colemanand CherylL.Coleman;001151705654,KellyW.Kirby;001151706405,WilliamF.Layton,Jr.andDeanna M.Berning;001151804879,JeanK.WilburnandLanceD.WilburnandGregoryS.Wilburn; 001151808847,RebeccaElyseLavaultandTimothyA.Russell;001152100056,ChadM.Daugherty andCassandraA.Daugherty;001152300156,MaryNadineLunsford;004252302614,Vicente Gonzalez,Jr.andMariaClaudiaRamosMojarro,trusteesoftheVicenteGonzalez,Jr.andClaudiaRamos LivingTrust,DatedOctober29,2022;004252302627,VicenteGonzalez,Jr.andMariaClaudiaRamos Mojarro, trustees of the Vicente Gonzalez, Jr. and Claudia Ramos Living Trust, Dated October 29, 2022. (TGI1474720
