CLEVELAND — Cindy Szabo bought her home in January. She saved for about a year to get the money needed for the downpayment and closing costs for her three-bedroom, one-bath home.
“All the money that you have to spend to buy it, besides the down payment and the closing costs. There’s the inspection fee and the title insurance and money was just going,” explained Szabo.
New rules come after a lawsuit settlement.
“Everyone is claiming that this is a big victory, a big consumer victory, I would suggest it isn’t,” said Mike Zinicola, EZ Sales Team Keller Williams.
The National Association of Realtors agreed to ban offers to compensate buyer’s agents on multiple listing services, also known as MLS, meaning the listing agent will no longer be allowed to offer a percentage of payment for the buyer’s agent on MLS.
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“I would suggest to you that it’s not a win for sellers, and no one can argue it’s a big win for buyers,” added Zinicola.
Zinicola has been in real estate for 25 years; he said buyers and sellers look at the purchase price differently.
“The seller, when they get an offer, they look at how much is this offer and what am I going to get. The buyer looks at how much they’re paying for the house, but the buyer has an additional consideration, which is how much out-of-pocket money do I have to bring to the table,” said Zinicola.
While the new rule will ban seller’s agents from offering compensation to buyer’s agents through the MLS, it doesn’t stop sellers from paying if arrangements are made another way.
“This agreement is that we will not have offers of compensation in the MLS. But what that does mean is that we can have offers of compensation outside the MLS. So, real estate companies for example, can advertise those things on their websites, those things can happen agent to agent. It just can’t happen on the MLS,” said Mike Valerino, CEO of the Akron-Cleveland Association of Realtors.
We spoke with Case Western Reserve University Economics Professor Jonathan Ernest when the details of the settlement were announced. He said then that the changes should save both buyers and sellers money.
“We might see a lot of agents that kind of specialize in offering maybe a flat rate rather than a percentage. or competing in a way,” said Ernest. “We could see changes in the quality of what, of what's being offered by agents. So, we could see that maybe you can choose from a menu of the things that you want your agents to do, but they might receive a higher or lower commission,” he said.
As for Cindy Szabo, she is glad she found her home sweet home under the existing rules.
“If I had to come up with cash to pay my agent, I wouldn’t have had enough money,” she said. The settlement is awaiting approval by the courts; it’s expected the new rules will take effect sometime in the fall.
