Are agent commissions actually coming down?

Are agent commissions actually coming down?

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January 20, 2024 • Issue #125

Money Moves

Happy Saturday!

This week, we’re looking at changes in how real estate agents earn their pay and an interstellar home designed for earthlings.

Are agent commissions actually coming down?

Agents

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It’s been over two months since a jury decided that the age-old practice (it has literally been in place since the early 1900s) of having home sellers pay their real estate agent and the buyer’s agent a commission “artificially inflates” the cost of selling and buying a home — a bombshell legal decision that sent the real estate industry into a tizzy.

Since then, a slew of lawsuits have been filed against the largest brokerages in the country. Nine lawsuits are pending in Missouri alone, with others filed in Illinois and, most recently, Arizona.

But has the uproar changed how real estate agents do business? It depends on who you ask.

Change is happening, to be sure, but it’s not exactly earth-shattering: More listings in several states now advertise a reduced or even $0 buyer agent commission, but so far, there hasn’t been a wave of agents slashing their fees.

What is happening is an increase in fee clarity, with more and more agents being upfront about the commission they charge and what services they’ll provide in exchange. Buyers’ and sellers’ agreements are clarifying language related to commissions, and more agents are explaining how these commissions are paid and, more importantly, who is responsible for paying them. In other words, many buyer agents are no longer advertising their services as “free.”

As of now, the lawsuit that spurred these changes is still being appealed, so the real impact won’t be felt until the pending actions (and their respective appeals) run their course.

Still, “The ruling has been a reminder of the importance of transparent communication with our clients,” Jen Routon, president of the Board of Directors of the Denver Metro Association of Realtors, tells me.

“Change is on the horizon for our industry,” she says.

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Money Move of the Week

Say goodbye to budget-breaking home repairs

Fed up with unexpected, wallet-draining repairs? Home warranties can act as a safety net against out-of-pocket costs for eligible wear-and-tear repairs on vital home systems and appliances you rely on. Statistics reveal homeowners spent an average of $6,000 on maintenance and repairs in 2022. Don’t add to that number — stay protected with a home warranty.

See Money’s list of the best Home Warranty Companies and make the smart choice today.

Listing of the week

Exterior

Daniel Sellers, Aerial Frog Photography

A mountain retreat that’s not of this world

Welcome to Vallecitos, a home in the Greater World Earthship community — an off-the-grid subdivision made up of entirely self-sufficient homes.

Earthships use recycled materials like tires, cans and glass and plastic bottles to build sustainable and energy-efficient homes, and Vallecitos is no exception. In addition to two bedrooms and two bathrooms, you’ll have your very own food-producing garden, complete with an aquaponic system. There’s also a Japanese floating deck and barrel sauna that offers panoramic desert views.

Located on 2 acres and just 20 minutes away from downtown Taos, New Mexico, the property is listed by John Johnston of Berkshire Hathaway HomeServices, and it can be yours for a cool $825,000.

Collage

Daniel Sellers, Aerial Frog Photography

’Til next time,

Leslie

P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at leslie@money.com.

P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Winter

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates.

Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips.

Key question: How much house can I afford?

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