2024 Is Going to Usher in a New, Better Way to Buy a Home
[ad_1]
Things are not OK in Realtorland. The US housing market is still reeling from pandemic-era shocks, home sales are stuck in a rut, and mortgage rates, while inching downward, are still near two-decade highs. It’s a bad time to be a buyer, and maybe a worse time to be a seller.
Despite all this upheaval, there’s another story brewing in which the stakes for everyone in real estate, from agents to the average consumer, are even higher. It won’t have anything to do with the debate over whether you should put your hard-earned cash toward rent or a down payment. Instead, it’ll be about court cases.
The biggest threat facing the industry is a mounting wave of class-action lawsuits that accuse the National Association of Realtors, along with some of the country’s biggest real-estate brokerages, of conspiring to rip off consumers by keeping the commissions paid to agents unfairly high. These cases are expected to reach major milestones in the next year, and the ramifications could be staggering: Tens, if not hundreds, of billions of dollars hang in the balance. Hundreds of thousands of Realtors could see their commissions slashed, which might force many out of the business. The old way of buying and selling homes could go away forever.
2024 will mark the beginning of a great experiment in real estate. The status quo won’t change overnight — there will be more courtroom showdowns before that happens — but some forward-thinking brokerages and agents, as well as a handful of startups, are already trying to figure out what comes next. Things are about to get really weird — and for American homebuyers, that could be great news.
The old way in jeopardy
If you’ve bought a home, you probably never cut a check to the agent who held your hand through the ordeal. For decades, agent commissions have been mostly out of sight and out of mind for homebuyers. But in 2024, many buyers and sellers may have to start thinking hard about just how much they’re willing to pay their real-estate agents.
When a house trades hands, the money usually works its way down a circuitous path — the buyer pays the seller, who uses a slice of that sum (usually 5% to 6% of the final sale price) to pay their agent, who then splits that money with the buyer’s agent. I’ve previously written about why the system works this way and the arguments for and against the model, but as a recap: Consumer advocates say this setup discourages market competition between agents. If you’re a buyer, you want to pay as little as possible, but your agent stands to make more if the home price goes up. Plus, it’s the seller who decides what percentage each agent will make before even listing their house. As John Kwoka, an economist and antitrust researcher at Northeastern University, told me: The incentives aren’t aligned.
There are going to be real-estate agents who are not able to articulate, let alone demonstrate, their value. Those folks will probably be out of the…
[ad_2]
Read More: 2024 Is Going to Usher in a New, Better Way to Buy a Home