RICHMOND, Va. -- As real estate agents nationwide sort through the implications of a landmark antitrust lawsuit settlement, local professionals say they worry for first time homebuyers and veterans.
“One of the things that a really good Realtor brings to the table is that they have the knowledge and expertise to get the whole job done,” said Heather Valentine, a real estate broker with 20 years in the industry.
Knowing which closing attorney or home inspector to use is part of her job and coordinating the dozens of service providers involved in a typical real estate transaction takes experience. Now the industry faces a seismic shift in how agents get paid.
The National Association of Realtors (NAR), representing over a million agents, agreed to a hefty payout of $418 million in damages, but more crucially, it calls for the elimination of longstanding industry norms revolving around sales commissions.
The typical 5 to 6 percent commission structure, a cornerstone of real estate transactions, may soon undergo a transformation pending court approval. Often the seller pays a portion of that commission to a buyer agent. If the settlement goes through, it is possible the buyers would end up paying a realtor out of pocket.
Heather Valentine emphasizes that these changes could disproportionately affect homebuyers, particularly first-time buyers and those relying on V.A. loans. Under current V.A. loan regulations, real estate fees and commissions cannot be covered, leaving buyers at risk of shouldering additional costs, or navigating transactions without representation.
“They wouldn't be able to have representation unless Realtors work for free, but Realtors aren't going to be able to work for free. This is how they literally feed their family,” Valentine tells CBS 6 News.
For the time being, it is business as usual at Valentine Properties while they await court approval of the settlement. Elsewhere Realtors nationwide are already exploring alternative business models, including billable hours or à la carte services, as potential replacements for traditional commissions.
Valentine predicts some Realtors may leave the business but that the cream of the crop will inevitably rise to the top.
"With the changes that are occurring, it's going to become more of a professional market," said Valentine. "The Realtors that make it through and stick it out and are able to adapt to the changes and figure out how to restructure their business, they're going to be really good professionals.”
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