DALLAS — Real estate agents nationwide are studying the potential impact of a clear challenge to the widely accepted practice of charging a 6% commission for the purchase or sale of a home.
"Compensation has always been negotiable, between both parties, and that has not changed," said Ashley Gentry, the president of the MetroTex Association of Realtors.
A case in Missouri, however, challenged whether "negotiable" was always at play with the National Association of Realtors (NAR). The target of several lawsuits, NAR took heat for a compensation structure where sellers were reportedly compelled to enter commission-sharing agreements as a condition for marketing homes on multiple-listing services (MLS). Last November a jury in Missouri found NAR and two brokerages liable for up to $1.8 billion for allegedly conspiring to keep commissions as high as possible.
Friday NAR announced it agreed to pay $418 million in damages and eliminate any commission rules.
"I think we've been pretty aware of the back and forth that's been going on and the realization that things are gonna change," said Dallas-area realtor Abigail Davis.
But what Ashley Gentry at the MetroTex Association of Realtors says will change is whether a specific compensation split between a buyer's agent and a seller's agent is spelled out on an MLS listing. As part of the agreement announced Friday, agents will not be able to put compensation offers on multiple listing services.
"We both bring value and we get paid for that value," Abigail Davis said of the commission agreements she has with buyers and sellers that are always negotiable, never predetermined or mandated.
In a study last year, the financial firm Keefe Bruyette & Woods predicted that the Missouri case and its ripple effect could lead to as much as a 30% drop in real estate agent commissions. The firm also suggested that, with that reduced profit potential, the industry could see up to an 80% reduction in real estate agents.
Ashley Gentry sees something else.
"I think it's healthy on both sides," she said. "We have to work harder to show our value, outside not just internally, and the buyers and the sellers also have to dictate what they want for the services that they are paying for."
Pressure to prove that you will get what you pay for.
"It's like you don't go to Starbucks and say you know what, today I'm going to pay you five cents. Right? Your attorney won't do that either," said Davis of the expectation of a proper fee to substantiate a real estate agent's expected level of service.
"Anybody can charge whatever they want and it's up to that client to agree to pay that, so that's never changed," added Gentry with MetroTex. "So in all reality, it's just going to make us be a little more audible with what we're already doing for our clients and that's advocating for them on a daily basis."