The way people buy and sell homes in Pennsylvania is changing; some of these changes have already started in certain places. To settle a lawsuit accusing Realtors and some real estate companies of keeping commissions high, the National Association of Realtors (NAR) has agreed to make major changes to how real estate deals work. These changes will apply nationwide by Saturday but have already started in some areas.
Here’s a breakdown of what’s changing and what it means for buyers and sellers.
No More Automatic Buyer Commission Splits in Pennsylvania
In Pennsylvania, when homeowners listed their property in the past, they typically agreed to pay a commission of up to 6% of the sale price (around $18,000 on a $300,000 home), which was then split between the seller’s and buyer’s agents. Now, this split is no longer automatic. Buyers must sign an agreement with their agent and may be responsible for paying the agent’s commission unless the seller agrees to cover it.
This change makes the process more transparent, helping buyers and sellers understand their fees and who is responsible for them.
Flexibility in Commission Rates and Services
With these new rules, buyers and sellers can agree on different commission rates depending on the services provided by the agent. For example, a cash buyer who doesn’t need help with a mortgage might pay a lower commission than someone who requires mortgage assistance. Similarly, sellers who need more marketing support—like professional photos or staging—might pay more than those needing only basic services.
This flexibility gives clients more control over what they pay based on the type of support they need.
Possible Decrease in Total Sales Costs in Pennsylvania
Some experts believe these changes could lower transaction costs in Pennsylvania over time. In other countries with similar real estate fee structures, commission rates are typically lower, which can result in reduced home prices since sellers don’t face high commission fees. Lower costs may also make buying a home in Pennsylvania more affordable.
Impact on Real Estate Agents
These changes could also impact real estate agents, especially those who rely on traditional commission structures. Some agents might leave the industry if they are unable to maintain the same earnings they had under the old system. Meanwhile, NAR is encouraging buyers to hire agents to guide them through the process, as hiring an agent will now be an active choice for buyers.
Agents’ Role in Educating Buyers and Sellers
Agents are still vital for navigating the details of a home sale. They help buyers by overseeing inspections, working with lenders, and managing title companies. For sellers, agents provide guidance on which offers are truly the best. For example, a slightly lower offer with fewer contingencies might actually be a better option for a seller than a higher, riskier offer. Agents educate sellers on the pros and cons of each offer to help them make informed choices.
These changes aim to create a fairer, more transparent real estate market where buyers and sellers have greater control over their costs and a clearer understanding of the services they’re paying for.
