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If you’re selling a house in the United States, you’re most likely going to want your property listed for sale on the Multiple Listing Service (MLS). The MLS is the most widely used database of for-sale homes. Real estate agents use it, and so do basically all of the online websites that you can think of where you’d go to search for houses you want to buy.
The National Association of Realtors has rules for listing a property on the MLS. Only an agent can do it, so if you aren’t working with a real estate agent to help you sell, you’ll need to use a flat-fee MLS service to list your home for you. And when you list your property, you’re required to offer a reasonable and fair commission to a buyer’s agent and specify what that commission is.
Many sellers have basically felt forced to offer a 2.5% to 3.0% commission to a buyer’s agent, since that’s the industry standard and sellers may be afraid that agents would deter buyers from coming to see their property if they don’t. This helps to explain why the average commission paid to a buyer’s agent by home sellers was 2.63% last year.
Soon, however, this could be changing — and selling a home could potentially get a lot cheaper.
A court case could mean some important changes to MLS rules
Under the rules set by the National Association of Realtors, buyers and sellers agents usually split a commission of about 5% to 6%. Paying these costs is usually the price of entry for home sellers, or the cost you’d have to pay to get onto the MLS.
This means most people who are getting a mortgage and buying a house hire an agent. It doesn’t seem to cost them anything on the surface, since the seller is the one paying the bill. In reality, of course, sellers price properties knowing they will pay a commission to a buyer’s agent. But buyers often don’t think about the fact their agent’s services come at this high cost when they are buying a home.
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Still, many sellers believe the NAR have artificially inflated the commission prices buyer’s agents get since there’s really no chance for a seller to meaningfully negotiate this cost with someone else’s agent. And a group of home sellers recently brought a class action case against the National Association of Realtors alleging that this was unlawful, anti-competitive behavior.
The court in Missouri hearing the case agreed with the sellers, and NAR was ordered to pay $1.8 billion in damages. Similar cases are likely to follow. While NAR is appealing the verdict, if it stands, it is entirely possible sellers will no longer need to pay any commission to the buyer’s agent as a condition of listing their home.
Could you benefit from this change as a seller?
MLS databases are actually run by local organizations, and while some have already changed their policies to allow for $0 commissions to be listed for buyer’s agents, others haven’t yet done so. So, whether you can immediately benefit from this change depends on your local housing market.
If you’re hoping to end up with more money in your checking account after a home sale by way of paying less commission, you may want to wait a bit (if your selling timeline is flexible) so you can see how things shake out. If you’re selling a $500,000 home and you can end up saving the 3% commission you’d pay to a buyer’s agent, you could end up with $15,000 extra in your pocket. So the delay might be well worth it.
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