Dana McMahan recently took a bold step when selling her home, choosing to bypass the traditional full-service Realtor model in favor of saving on commission costs. Historically, home sellers in the U.S. have been responsible for paying a 5%-6% commission, typically split between the seller’s and buyer’s agents. McMahan, who lives in Louisville, Kentucky, decided instead to list her home for a flat fee of $500 on the local MLS, which allowed her to save significantly on commission fees. However, to attract potential buyers, she still offered a 3% commission to the buyer’s agent, a move she felt was necessary to ensure her home received adequate attention from real estate professionals.
Some Realtors have warned that in competitive markets where homes for sale receive multiple offers, buyers may be pushed to pay their own agents out of pocket David Ryder/Bloomberg/Getty Images
The decision to go this route aligns with recent changes implemented by the National Association of Realtors (NAR), which took effect on August 17. These changes, prompted by a series of antitrust lawsuits, are intended to create more transparency and competition in the real estate industry. The new rules prohibit sellers from advertising how much they will pay a buyer’s agent in the MLS, aiming to prevent commission-based steering, where agents might avoid showing homes that offer lower commissions. While these changes are designed to benefit consumers, some experts worry that they might lead to increased costs for buyers, who may now be expected to pay their agents out-of-pocket in competitive markets. This shift could add another layer of financial burden to the already costly process of buying a home.
