Latest News

Buyers: Potential Changes in Real Estate Commissions Could Affect Your Pocketbook

The real estate industry has been shaken up by two class action lawsuits involving seller-paid buyer agent commissions. Historically sellers have compensated both the seller’s and buyer’s brokerages upon a successful sale, in a typical 50/50 split. Potentially, a significant shift could come in the way buyer’s agents are compensated and could directly affect buyer’s pocketbooks.

The Lawsuit

At the heart of the Sitzer/Burnett class-action lawsuits, the Plaintiffs allege that they paid too much in commissions to their agents, and want to essentially undo the contract they agreed to even though they were satisfied with the transaction. They allege that the National Association of Realtors® (NAR) has been conspiring to require sellers to pay buyer agent’s brokerage commissions, which have been inflated and go against federal antitrust laws.

NAR’s Position

The NAR will argue that compensation/commissions are and has always been negotiable. The seller chooses what fee they will pay for their agent’s representation, and how much of that fee goes to the buyer agent’s brokerage. The Multiple Listing Service (MLS) encourages clear cooperation between Brokers, and the MLS has benefitted consumers for 100+ years. Realtors ® (members of the NAR) abide by a Code of Ethics to “protect and promote the interests of the client.” There is so much value when using a real estate agent to represent a home buyer or seller. Agents only get paid when there’s a successful transaction.

The Potential Impact on Buyers

If the plaintiffs win their lawsuit, it will undoubtedly lead to significant changes in how real estate commissions are handled. The biggest potential negative outcome could be that buyers would be responsible for compensating their own agents directly. Currently buyers already have to save up for their down payment and closing costs, which for many is a big reach, sometimes taking years for them to accumulate. So imagine if these buyers are suddenly on the hook for their agent’s commission, which could be 2.5 to 3% of the purchase price? This would translate to needing an extra $10,000 to $20,000+ in cash! Unfortunately, this will result in putting homeownership out of reach for many, especially the younger and lower to middle class America.

What Can Homebuyers Do?

While the outcome of this lawsuit remains uncertain and the impact could take years to unfold, it’s always wise to stay informed and proactive when it comes to your future real estate purchase. Here are a few steps you can take:

  1. Stay Informed: Keep an eye on the progress of the lawsuit and any potential changes in legislation that might affect commissions. Be aware of the potential costs you might incur as a buyer.
  2. Save More: If homeownership is in the future for you, start saving now. Do you really need to buy that fancy car or would you rather put that money toward owning a home?
  3. Seek Expert Advice: Consult with real estate professionals who can help you understand and navigate these changes and provide clear guidance on how to proceed with your home search.
  4. Buy now:  For those of you who are on the fence about buying, maybe you should think about getting off the fence? When the changes occur, it could directly affect you and your savings account. Currently (NOW) you can get great representation and advice on your behalf with your own agent who gets compensated by the seller…I would call it a Win-Win for you.

What Does a Good Buyer’s Agent Do?

Many consumers are not aware that the majority of buyer’s agents work solely on commission. They could spend hours showing you properties and write multiple offers on your behalf…they could even take you through the buying process…but if you don’t like the homes you are shown, you don’t get your offers accepted, or you cancel the transaction during the escrow process, they are NOT compensated. This often adds up to hours upon hours of no compensation.  Here’s what you get with a good buyer’s agent:

  1. Create your realistic search: They will help guide you and hone down your wish list according to your budget. They will show you homes that you can afford, saving you lots of time and money.
  2. Write offers: Once you find a home you like, they will craft an offer with your best interests in mind. They will present it in a way that highlights the positives and justifies your offer price/terms.
  3. Negotiate: They will negotiate on your behalf initially and during the entire transaction, again to help save you money.
  4. Advocate: They will become your trusted advisor and can provide you with trusted vendor referrals for the future. They will often become a friend for life, as this is the biggest transaction you will make in your life.

In a real estate market that’s constantly evolving, it’s crucial to be aware of potential changes and their impact on your home buying experience. The outcome of the lawsuit might be uncertain, but your ability to adapt and make informed choices is entirely in your hands.

Stay Informed on This Issue

If you would like updates on this issue or would like me to represent your interests in an upcoming purchase, contact me.

Comments (3) Show CommentsHide Comments (Remember)

Cool. Add your comment...

Your email address will not be published. Required fields are marked *

Leave your opinion here. Please be nice. Your Email address will be kept private, this form is secure and we never spam you.


October 26, 2023

Very well written as well as informative Cathy 🙂

October 26, 2023

Interesting read l like the system as is I’ve purchased and sold several homes over the years

Greg Smith

November 2, 2023

All real estate transactions should be a fixed fee. The percentage commission model is outdated and illogical. The paperwork to buy and sell a home is no different for a $500,000 home and a $900,000 home. Fixed rates should be standard.

More Articles from Hawaii Life