Suze Orman Says a Big Change Is Coming to Homebuying and Selling
Written by
Nicole Spector
Edited by
Gary Dudak
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The real estate market has been on a wild ride the past few years. During the peak of the pandemic, interest rates plummeted and buyers got into bidding wars over homes — sometimes paying hundreds of thousands dollars more than what the home was listed at (never mind what the home was actually worth).
Then, interest rates skyrocketed and the bidding storms calmed some, but homes have still been widely unattainable because there’s just not enough supply to meet the overwhelming demand.
Now, a curveball has been thrown, and an already confusing housing market could be getting even more confusing, particularly for buyers. Financial guru Suze Orman recently wrote about a significant change that could go into effect as soon as this coming July.
A New Era Will Arrive as Soon as July
“We’re about to enter an entirely new era in home buying and selling. A settlement in a federal antitrust case will soon end the standard way of paying for a home sale that has been in place for decades,” Orman wrote on her blog.
For more context, earlier this year there was a $418 million settlement announced by the National Association of Realtors (NAR). The settlement, which was reached with groups of home sellers, will erase the standard 6% commission paid by the seller.
Selling Your Home Could Get Cheaper
This settlement could make it cheaper to sell or buy a home.
“The net effect is that the cost of buying and selling may come down a bit, as it is expected that real estate agents will collect billions less each year in sales commissions,” Orman said.
Under the rules of the settlement home sellers will pay their real estate agent (along with commission), but no longer cover the costs of the buyer’s agent.
“But because that [commission] fee will no longer be split with a buyer’s agent, the seller can expect to pay a lot less to hire someone to help them market their home for sale,” Orman said. “For example, if the standard in your area was 6% and half of it was shared with the buyer’s agent, the same listing might now cost a seller 3% because the seller’s agent will not split the fee with a buyer’s agent.”
She continued, “In strong seller’s markets that gives the seller a chance to net more from the sale. In a softer seller’s market, it might enable sellers to set a slightly lower price given they are not paying such a large commission.”
The Situation Is More Complex, and Potentially Risky, for Homebuyers
As Orman noted, the settlement makes purchasing a home a bit more complex, as buyers will now have to pay their real estate agent.
“Or the buyer can skip having an agent and negotiate directly with the seller and seller’s agent,” Orman said, adding that this could be a “potentially dangerous situation for first-time homebuyers.”
“When you’re a home-buying rookie, the value of an agent can be especially important in helping you navigate the search, the offer process, and renegotiating when home inspections find costly issues,” Orman penned. “But let’s be real: first-time buyers are already hard-pressed to come up with the down payment and closing costs. The prospect of now having to also pay a 2%-3% fee to an agent is just more pressure on already-stretched first-time buyers.”
The Future Is Uncertain
We really don’t yet know how the repercussions of this new settlement will shake out. Orman will keep her readers in the loop.
“Let’s just wait and see how the U.S. residential home market adapts to the end of the seller-pays-all commission structure,” Orman said. “You can be sure I will update you as things progress.”
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