Major Changes in Real Estate Commissions: What to Expect When Buying a Home in Chattanooga
Chattanooga residents who are planning on entering the property market should prepare for altered dynamics in the relationship with their real estate agents. In a dramatic turn of events on the national property market scene, the way you pay real estate agents is no longer set in stone and is open to negotiation.
Automatic Commissions: Gone and Forgotten
Earlier this month, the National Association of Realtors (NAR) agreed to do away with automatic commissions as part of a settlement in an antitrust lawsuit. This move aims to reduce the cost of either buying or selling a property on the market today.
NAR President Kevin Sears expressed that the organization felt an “obligation to reach a resolution that’s best for not just the NAR, but for our members and our industry.”
A Look at the Numbers
Traditionally, real estate commissions average between 5 to 6%, shared between the buying and selling agents. For instance, with the average Hamilton County home selling price from 2022 being $373,294, a 6 percent commission would be a hefty $22,397. In Bradley County, the same 6 percent commission for the average home selling price of $291,543 would be a substantial $17,492.
Negotiating: A New World Order
Going forward, agent compensations will no longer be incorporated in listings. Instead, buyers and sellers can negotiate upfront compensations with their agents. Furthermore, buyers’ brokers will now need to have written agreements with their clients. This new change means that each transaction will now come under greater scrutiny. Realtors, therefore, need to effectively elucidate their value to the clients.
Questions Ahead
While these changes will certainly lead to greater transparency, they also raise several questions. How firm will buyers be allowed to remain on a commission? Will this commission be included in the mortgage, or will it have to be paid out-of-pocket by the buyer? Despite these questions, authorities assert that, in practice, not much has changed. After all, under previous transaction models, the commission has always been negotiable.
Adjusting to Change
For Chattanooga residents, these changes bring both opportunities and challenges. With the power to negotiate, buyers and sellers can now truly play an active role in shaping their property transaction. However, it also places greater responsibility on their shoulders to be informed and make fair but effective negotiation choices.
As always, HERE News Network will remain dedicated to providing accurate and timely information. Stay tuned to our network as we provide more updates about these dramatic changes in the realty world in Chattanooga and beyond.