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The real estate industry is facing major upheaval due to recent legal decisions regarding buyer’s agent commissions. A lawsuit in Missouri has ruled that requiring the seller to pay the buyer’s agent commission is illegal. This ruling could have ripple effects across the country.
However, sellers can still choose to pay buyer’s agent commissions if they believe it will help market and sell their home for top dollar. Real estate agents need to have clear conversations with sellers about commissions being separate from the listing agreement.
The bigger concern is that virtually every major real estate brokerage is now vulnerable to lawsuits related to past transactions where the seller paid the buyer’s commission. This means the entire real estate brokerage model is at risk. Brokerages may need to file for bankruptcy and re-form under new entities not tied to past transactions.
Additionally, the Department of Justice is considering making dual agency completely illegal. If implemented, this would fundamentally change the compensation structures that have existed for decades. The DOJ may see this as protecting consumer interests, but it could be government overreach into business practices.
These changes will likely benefit large financial technology companies who aim to disrupt real estate. The industry will have to adapt quickly to survive and prevent these new entrants from taking over.
In the future, there will likely be fewer real estate agents overall. Only the best agents who can clearly demonstrate their value to consumers will remain viable.
The National Association of Realtors and the old guard real estate establishment failed to see these threats coming. Now the entire industry is scrambling to deal with massive changes in how real estate business is conducted. It will require agents and brokerages to work together under new models if the smaller, leaner real estate industry hopes to thrive in the future.