Starting this month, the rules have changed for governing real estate commissions. We’ve been talking about this since the National Association of Realtors (NAR) voted on this change to the commission structure in March, a structure that has been in place for over 30 years.
By now, most real estate professionals have positioned their real estate wheels to work within the new regulations. They have likely also developed a dialogue to have with both buyers and sellers in this market. So, let’s go over some of the significant points.
Typically, sellers paid the agents on both sides of a transaction, selling and buying. This was a percentage stated at the time the property was listed. Sellers will still agree on a listing commission with their agent, however, now have more flexibility to decide whether to offer a commission to a buyer’s agent and what that commission will be. There is no commitment on the seller’s part to automatically offer a commission to the buyer’s agent and the buyer’s agent is free to request a commission fee at the time they present an offer. Like everything in a real estate transaction, it becomes a negotiable point.
The sticking point here is your listing agent may tell you that if you don’t offer a selling commission, selling agents won’t bring buyers to the property. There is of course some truth to that, however, if the buyer’s agent’s commission becomes part of the negotiation, then the agent has no reason not to bring buyers. Also, on popular properties, a buyer may even step up and pay their agent directly if a buyer’s commission cannot be satisfactorily negotiated.
You also need to set guidelines with your listing agent relative to their commission should they find the buyer for your property. Traditionally, when a buyer didn’t have an agent, the seller’s representative often kept the commission offered to the buyer’s agent. Again, this should be agreed upon at the beginning of the listing agreement.
So while you’re thinking about this new round of chaos, let’s go over the July sales for Manatee County published by the Realtor Association of Sarasota and Manatee.
Single-family homes closed 9.9% more properties compared to last July. The median sale price was $499,000, lower by 3.1%, and the average sale price was $661,104, up 3.0%. The median time to contract was 52 days this year compared to 29 last year. There are 10% more listings this July, making the month’s supply of available properties 3.9 months compared to 2.7 last year.
Condos closed 9.6% fewer properties this year. The median sale price was $329,000, down 6% and the average sale price was $354,404 down 8.8%. The median time to contract was 77 days this year compared to 47 last year. New listings were up 0.4% and the month’s supply of available properties was 5.6 months compared to 3.2 months last year.
Per the Realtor Association, both Sarasota and Manatee counties experienced a shift in the market in July. Median prices declined and we are experiencing longer times to sell. Basically, they feel the market is balancing out and buyers have more purchasing power.
The National Association of Realtors says it’s too soon to speculate on how the market will change and I certainly agree. Some of the early feedback around the country where agents have already started with the new regulations is that total commissions appear to have come down. Some of the commissions could be reflective of the value of the property and the level of marketing required.
It’s hard to say at this point, but we do live in a very high real estate price point environment and agent commissions could reflect that.
