It’s time to talk about the changes to the traditional commission structure in real estate. If you’re in the industry, you undoubtedly know what we’re talking about. A series of lawsuits against, among others, the National Association of REALTORS® has resulted in upcoming changes to how commissions will work when buying and selling a home.
Many of those changes will take effect in August, so we thought it would be a good idea to highlight this recent survey from Clever Real Estate that showed a divide between how agents and the public at large view the changes. On the consumer side, the survey indicates a mixed response. Many buyers and sellers support initiatives that could lower transaction costs and increase clarity in the real estate process.
However, if you examine the results more closely, it’s clear that many of our potential clients don’t understand how commissions worked before these changes either. Here are a few of our takeaways.
The public has a desire for transparency. Consumers want to know how commissions work to fully understand what they are paying for and why. However, it’s important to note that while the public supports the changes, they also believe Realtors like you get paid much more than you generally do. (More than half – 54% – think the typical agent makes $80,000 or more, and a third think it’s $100,00+.)
Everyone is concerned about first-time homebuyers. The general public and agents both identified this group as a likely “loser” in the fallout of these future changes. (40% for the public and a whopping 85% for agents.) Potential first-time homebuyers also shared legitimate concerns about being unable to afford a home due to the changes. So, it’s important to convey exactly how the changes affect this demographic in our area as they play out. After all, sellers can still help cover a buyer’s agent fee—it’s just much more negotiable and flexible now.
It will be important for buyer’s agents to emphasize their value. Listen, we know we work with some of the best partners in the Milwaukee market and beyond, but the survey showed concerns about the quality of service from buyer’s agents in the future. As we said above, both agents and the public identified this group as one of the biggest potential losers because of these changes. For regular consumers, that realization came with fears that their representation may cut corners and provide less personalized service due to a potentially diminished fee. (Almost half of respondents (48%) identified this as a fear. Continue to assure future clients they’re in good hands, and talk about the importance of your services anytime you can.
There are many unknowns about how this issue will ultimately play out. But we know two things for sure: Buyers and sellers will continue to need expert professionals to guide their journey home, and Focus Title works with some of the best real estate partners anywhere in Wisconsin. We know you’ll navigate everything that comes your way, and our team will be here for anything you and your clients need!