Squeezing Realtors Is Just What the Housing Market Needs
Commissions are in a state of flux, but one immediate outcome should be increased transactions that will get the property market moving again.
Choice will help.
Photographer: Jordan Vonderhaar/Bloomberg
News that the National Association of Realtors agreed to settle litigation over commission rules for real estate agents has fueled intense discussion on the transformation about to sweep through the industry. While there’s plenty of disagreement over the impact for homebuyers, sellers and brokers, this is a welcome disruption at a time of woeful housing affordability with commissions estimated to total about $100 billion annually.
One underexplored implication may well be the one with the greatest immediate impact. The end of standard commission rates of about 6% of the sale price, currently paid entirely by sellers, should make it easier and cheaper to list homes for sale. More listings will be good news for an inventory-starved market where transactions on existing homes are hovering near the lowest in more than a decade, and buyers are looking for increased supply to alleviate upward pressure on prices and give them more choice.