It has long been customary for sellers to cover the commissions for both their own agents and the buyers' agents. Although the practice was never mandated, it has become the norm due to its significant effect on a property’s marketability. 

A Shift in Commission Responsibility

Starting in August 2024, a significant change is anticipated: sellers may no longer be responsible for paying the commissions for both their own agents and the buyers' agents. Instead, homebuyers who seek representation may need to pay their agents separately.

This potential change has sparked a debate among industry experts and stakeholders, as federal regulators are expected to address the finer details in the near future.

The Traditional Approach and Market Dynamics

Historically, offering to pay both commissions has been a strategic move for sellers. 

Consider a scenario where two similar properties are listed at the same price with comparable amenities: If one seller offers to pay both commissions while the other does not, the property with the full commission offer will likely sell faster. 

Buyers, already burdened with down payments and closing costs, may find it financially unfeasible to also cover their agents' commissions. Offering to cover commission may help sellers to preserve their buyer pool and avoid resorting to price reductions.

The upcoming changes in commission structures will undoubtedly make 2024 an important year for real estate, but as interest rates are projected to decrease slightly and low inventory levels will likely persist, demand is going to remain high.  

Closing Thoughts

As the real estate market continues to evolve, sellers must carefully consider their strategies regarding agent commissions. It’s important to remember that you benefited from the system when purchasing your current home, and you’ll likely benefit from it again as a buyer for your next one. 

While the new rules could potentially alleviate some financial burdens for sellers, the traditional approach of offering to pay both commissions still holds merit in ensuring a quicker sale.

Looking to buy or sell your home in 2024? Give us a call or visit us online to connect with our expert team of mortgage professionals today.