Real Estate Industry Shake Up in America A New Era for Realtors: How August 17th Changes Will Reshape the real estate Industry and how realtors will make money
Josh Camaro
August 2 2024
News
5 min read
5 min read
A New Era for Realtors: How August 17th Changes Will Reshape the Industry
The real estate industry in the United States is on the brink of a significant transformation, set to take effect on August 17th. These changes stem from a $418 million settlement announced in March by the National Association of Realtors (NAR), marking what many experts call the biggest shift in the industry in a century.
What’s Changing?
Traditionally, home sellers were responsible for paying a 5% to 6% commission fee, which was split between their agent and the buyer’s agent. This model is now being challenged by new rules aimed at increasing transparency and empowering consumers. Two key changes are coming:
Removal of Compensation Details from MLS: Compensation details will no longer be included in Multiple Listing Services (MLS), the databases Realtors use to share home listings. This move is intended to decouple the payment structure from the listing process.
Mandatory Buyer’s Agent Agreement: Realtors will now be required to have a signed agreement with prospective homebuyers before showing properties. This agreement will inform buyers that they may be responsible for paying their agent's fees if the seller does not cover them.
These changes are expected to shake up the traditional commission structure, with some estimates predicting a potential drop in real estate commissions by 25% to 50%. This could pave the way for new business models, like flat-fee and discount brokerages, to gain traction.
The Impact on Realtors
The upcoming changes are causing a mix of reactions within the industry. Some Realtors are optimistic, viewing this as an opportunity for innovation and a chance to adopt new business models. Others, particularly those accustomed to the old ways, are bracing for a "messy middle" as the industry adapts.
There are concerns that the new rules may disproportionately impact less experienced agents. Since buyers will now need to sign a contract before touring homes, they might be more inclined to work with seasoned Realtors, potentially sidelining newer agents. However, some, like 19-year-old Realtor Madison Mathias, believe that confidence and continued education will help overcome these challenges.
Opportunities for Innovation
The industry shift is also creating opportunities for companies with alternative business models. For example, Redy allows agents to bid on home listings, potentially paying sellers for the chance to represent them. Meanwhile, Flyhomes has launched an AI chatbot to provide information that buyers might traditionally seek from a Realtor, positioning itself as a key resource in this new landscape.
Conclusion
As the August 17th changes approach, the real estate industry is gearing up for a period of adjustment. While some Realtors are apprehensive, others see this as an opportunity to innovate and thrive. Ultimately, these changes could lead to a more transparent and consumer-driven market, fundamentally altering how real estate transactions are conducted in the U.S.
