Now that I'm at a real keyboard.
The main takeaways...
COMMISSIONS GOING DOWN 25-50%!! Yeah, because the Buyer will be paying their own fee for representation rather than Buyer's Agent getting paid through a listing fee coop. The total isn't going down, it's just being shifted from one side to the other. House prices might drop a percent or two as a result but Buyers will have that much in additional purchase expense. Talking heads are trumpeting it as a huge thing but in reality it's a net-zero change being grossly misrepresented in the press. Sure, Buyers can go commando and not use an agent but get your popcorn ready because it'll be an ungodly train wreck for a while. Buyers, especially younger buyers who've never dealt with real estate transactions, will be wading in with a metric buttload of misinformation, incorrect presumption, entitlement mentalities, and a heaping helping of outright ignorance. They're going to lose their minds when they're told "No" or get hung out to dry on legal technicalities directly resulting from their choice of non-representation. I foresee title companies and abstract offices upcharging for unrepresented buyers due to the increased workload these customers will inevitably generate.
No more being forced to use MLS! Okay, sure. So where are prospective buyers going to see your property? Where do you think Zillow, Redfin, Compass, etc. get those pretty pictures? No, you won't be forced to use a particular MLS, but unless you want your house to sit unnoticed, you'll have to market it somewhere. There will likely be separate agreements for MLS services, fee structure yet to be determined.
Biggest changes will be in new home buyers and buyers who like trading up every 5-7 years. New home buyers traditionally don't have the means to fund much beyond the most basic of basic down payments on an FHA Insured mortgage. Stacking an extra couple percent for Buyer Representation, which they likely won't be able to roll into the note, puts them several years behind. Delaying initial entry into the ownership market has huge ripple effects that will last decades. In terms of trader-uppers, that group traditionally trades up when they've built enough equity to get into a larger home with no out of pocket expense. They buy up with time and market appreciation, not hard currency. Having to pay Buyer's Representation fees out of pocket will delay their trade-up cycle by several years. Again, ripple effects, especially in entry-level housing as existing owners hold onto their places longer, either from not wanting to incur the additional Buyer's Representation expense of moving up, or waiting for their house value to increase X amount in a depressed market.
In general, the net transaction costs won't appreciably change. The difference is which direction the money comes from and the expense of additional steps mandated into the process. Overall I think it's going to have a big impact on the housing marking, though not in the direction everyone thinks. I foresee the market bumping up short term from general "Yeehaa!" sentiment, but stumbling quickly when buyers realize how the change affects them. Long term it's going to have a damping effect, mostly due to shifting of previously seller-funded fees/costs over to the buyers' side.
Insofar as part-time agents go, I don't see much of a change. Part-timers aren't doing it for a living, they're doing it as a hobby or supplemental income. Yeah, they'll see some shift in net revenue, especially those that specialize in buyer representation, but overall it won't affect them much. Full-timers will bear the brunt, not only in income changes but also in public sentiment when people realize this isn't the eutopic paradise they envisioned. It won't be the fault of the public for getting exactly what they wanted, it will be the fault of the agents because... Big Real Estate.
Brad
