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A New Era for Homebuying: Buyers Have More Power

A New Era for Homebuying: Buyers Have More Power

A New Era for Homebuying: Buyers Have More Power

Mar 23, 2024

Imagine a renowned beer brewing town where, for decades, the cost of a pint had remained at a premium, unchanging, and uniform across all breweries, regardless of the beer's quality. This static pricing scenario reflects the real estate industry's longstanding fixed commission rates, which have traditionally been locked at 5-6% of a home's sale price, unaffected by the property's specifics, realtor services, or location.

The recent $418 million settlement by the National Association of Realtors (NAR) ushers in a new era in homebuying. Historically, home sellers indirectly covered the buyer's agent's commission, embedding it within the home's sale price, thus ensuring the agent's fee without the buyer's direct involvement. Now, buyers have the freedom to negotiate their agent's compensation, tailoring it to their specific needs and circumstances.

Save Money on Commissions

  • Increased Negotiation Power: Buyers now have the leverage to negotiate lower commission rates with their agents. Based on the buyer's lifestyle, purchase goals, and the level of assistance needed, these commission rates are likely to decrease from 5-6% to 2.5-4%.

  • Transparency as a Differentiator: There's a clearer understanding between buyers and agents about service expectations and costs. This transparency ensures that buyers are more informed and can make choices that align with their interests, encouraging agents to be more upfront about the value they provide.

Pay Per Service

  • A La Carte Service Selection: Buyers may be able to select specific services such as contract negotiation or closing support, potentially reducing fees from a standard 3% commission to a flat fee or a 1% rate for chosen services.

  • Tiered Service Packages: Agents may offer varied levels of service — basic, standard, and premium — each priced differently. Depending on your familiarity with the homebuying process, you can opt for minimal assistance or comprehensive support.

  • Performance-Based Compensation: Buyers may be able to structure commissions based on their agent achieving specific outcomes, like securing a property below market value. This aligns their motivation directly with the buyer’s financial goals.

Access New Technology

  • Always A+ Service: New interactive apps make exploring potential homes more engaging. AI assistant applications such as HomeScore provide buyers with clarity and peace of mind regarding maintenance expectations and the ability to address limitless questions that arise.

  • Smarter Insights & Negotiation Strategies: By analyzing permit data, inspections, photos, seller disclosures, and more, tools like HomeScore can access a greater depth of data to support negotiations. 

  • Transparency Comes Standard: New compensation structures will emphasize more positive buyer outcomes, and AI buyer assistants are set to become more popular for their role in ensuring transparency. These tools can analyze extensive market data to provide insights and recommendations, enabling buyers to make informed decisions based on data-driven rationales.

Get more tips on how you can save throughout the home-buying process