New rules are changing how people buy and sell homes across the U.S., including in Colorado. After a class action lawsuit settlement, the National Association of Realtors agreed to change how realtors are paid when helping buyers and sellers.
Since the 1980s, it’s been common for the seller to pay the buyer’s agent’s commission, said Jon Holsten, a realtor in northern Colorado.
Traditionally, sellers paid about 5% to 6% in agent fees, covering both the buyer’s and seller’s agents. The two agents usually split this amount. While this has been the norm for years, Holsten explained it was always open to negotiation.
Under the new rules, buyers now have to sign a payment agreement with their agent before viewing homes. Sellers must also negotiate with their agents on their fees without automatically agreeing to cover the buyer’s agent’s commission.
This opens up more room for negotiation between buyers and sellers, Holsten said.
Adrian Ruiz, a seller working with Holsten, navigated these new rules recently. Instead of assuming he’d cover the buyer’s agent fees, he negotiated with Holsten on a fair percentage to pay his agent. This approach saved Ruiz money and helped him sell his property.
However, Holsten warned that not everyone benefits from these new rules. Sellers might save money by only paying their agent, but it could discourage buyers who can’t afford to pay their own agent. First-time or young buyers, who already struggle with costs like down payments, might find it even harder to afford a home.
Fewer buyers might be interested in touring a home if they know they have to cover their agent’s fees. That’s why Holsten advises sellers to consider offering to pay part of the buyer’s agent fees to attract more potential buyers.
Homes aren’t selling as quickly as they were in recent years, so buyers are likely to ask for help with agent fees. Holsten said it’s still unclear how these rules will impact the market long-term, but it’s likely that new standard practices will develop over time.
The new rules could also make the home-buying process more daunting for those without an established relationship with a realtor. Holsten, who likes to take clients on home tours to build trust, noted that buyers now have to negotiate and sign a commission agreement with an agent before they even step foot in a home.
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