In a recent legal settlement, the National Association of Realtors (NAR) agreed to pay $480 million due to allegations of collusion against American home buyers.

The crux of the lawsuit centered on the claim that sellers were unknowingly paying for the commissions of their buyers’ agents.

The traditional practice in real estate transactions involves the seller’s listing agent agreeing to a commission fee, a portion of which is shared with the buyer’s agent.

Critics argued that sellers were unaware of this arrangement and felt they were essentially paying twice.

However, real estate expert Chad Bocchini contends that sellers are not actually paying extra.

The commission fee is negotiated between the seller and their listing agent and is ultimately borne by the seller regardless of whether they employ a buyer’s agent.

In fact, if a house sells without the involvement of a buyer’s agent, there are no commissions at all.

Bocchini highlights the unintended consequences of the settlement.

By eliminating the sharing of commissions, it may reduce homebuyer representation and discourage agents from providing essential services such as negotiating, securing insurance, and educating first-time buyers.

Ultimately, Bocchini believes the settlement will harm first-time home buyers who may lose out on valuable guidance and advocacy.

He emphasizes that without proper representation, buyers could face challenges in navigating complex real estate transactions while also addressing their concerns with the seller’s agent, who primarily represents the seller’s interests.

Bocchini concludes by disputing comparisons to European real estate practices, arguing that European consumers still pay additional fees for marketing and advertising, potentially negating any perceived advantages.

Sellers May Not be Overpaying for Commissions

Real estate expert Chad Bocchini contends that sellers are not actually paying extra for commissions, as the commission fee is negotiated between the seller and their listing agent and ultimately borne by the seller.

Eliminating Commission Sharing has Unintended Consequences

Bocchini highlights the unintended consequences of eliminating commission sharing, such as reduced homebuyer representation and decreased willingness of agents to provide essential services.

First-Time Home Buyers Face Challenges Without Representation

Bocchini believes the settlement will harm first-time home buyers who may lose out on valuable guidance and advocacy, as they may face challenges navigating complex real estate transactions and addressing concerns with the seller’s agent who primarily represents the seller’s interests.