GRAND RAPIDS, Mich. — A recent settlement could change the way people buy and sell homes in West Michigan.
Last week, the National Association of Realtors announced it would pay $418 million in damages to resolve several lawsuits, which claim the industry trade group conspired to boost agent commissions.
Under the settlement reached, the association also agreed to implement a new rule that prohibits offers of broker compensation on its Multiple Listing Services (MLS) site.
Nicole Rinks, the broker of Century 21 Affiliated in Grand Rapids, calls the policy change a “surprise.”
“I think there was a little bit of surprise,” said Rinks. “[However], I think sellers are going to see a value in continuing to offer compensation to the buyer's agent, and buyers are definitely going to continue to want representation.”
Consumer advocates argue the rule could give sellers and buyers leverage to negotiate lower agent commissions or even persuade some in the market for a house to forgo representation, which could then bring down the overall costs of the process.
Rinks disagrees and says buyers’ agents provide a needed service.
“Buyers are not an expert on the home-buying process,” said Rinks. “It's a buyer's agent’s fiduciary responsibility to represent the buyer. That means to protect their best interest, to save them the most money, [to] make sure that they're getting the inspections that they need.”
If a buyer keeps their agent, Rinks notes they will now need to figure out how to cover their compensation. Currently, sellers pay for those costs, and while they still can under the settlement reached, she says if their houses receive multiple offers, they could choose one without such a concession.
Rinks thinks, in effect, it would hurt first-time homebuyers or those with special loans, like veterans, the most. She hopes sellers decide against doing so.
“[Buyers] are already bringing their down payment and their closing costs,” said Rinks. “They're funding the entire transaction so when they are left without representation ... I mean, that's just really going to hurt.”
She added, “[Sellers] are going to be begging those buyers to come again if the market shifts. I do think sellers will see a value in continuing to pay the buyer's agent because not only will it hurt the buyers, it will eventually hurt the sellers as well.”
Dale Zahn, the CEO of the West Michigan Lakeshore Association of Realtors, echoes Rinks’s thoughts.
“There are changes that are coming down the pipe,” said Zahn. “There are no questions about that.”
Zahn encourages everyone involved in the industry to adapt the best they can.
“[Realtors] that understand it and embrace change will survive,” said Zahn. “Buyers will buy; sellers will sell. It’s just the path to how they get that done that is going to change.”
A federal court still needs to sign off on the settlement. If approved, it would go into effect in mid-July, according to the NAR. The association denies the allegations made against them.
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