Overview
A market analyst has discussed the ongoing legal developments regarding real estate commissions in the United States and their potential impact on both the U.S. and Canadian markets.
U.S. Real Estate Commission Changes
Legal changes in the U.S. are set to take effect on August 17, resulting from class action lawsuits. These changes will eliminate the practice of listing the amount of commission payable to the buyer’s agent on MLS systems. Traditionally, real estate commissions in the U.S. included both a seller’s agent commission and a buyer’s agent commission, typically splitting a 5-6% total commission.
Expected Impact on Commissions
The Consumer Federation of America predicts these changes could reduce commissions for sellers by up to 30%. Consequently, real estate commissions could decrease from the current 5-6% range to 3-4% within a year.
Potential Effects in Canada
Similar class action lawsuits are underway in Canada, which could lead to comparable changes in the Canadian real estate market. This would likely result in lower commissions and a shift in how Canadian consumers shop for real estate services, emphasizing negotiation and competition among agents.
Impact on Real Estate Agents
The policy changes are expected to drive part-time agents, who handle a small number of transactions annually, out of the market. This would benefit more experienced agents who handle a higher volume of transactions. The adjustments in policies and laws aim to alter agent behavior and market outcomes, fostering a more competitive environment.
