A ‘For Sale’ sign is posted on the lawn in front of a home on March 15, 2024, in Miami, Fla. The National Association of Realtors announced that it had reached a nationwide $418 settlement of claims that the industry had conspired to keep agent commissions high.
Joe Raedle/Getty Images
Joe Raedle/Getty Images
Big changes are coming to the way people buy and sell houses in the United States. The National Association of Realtors settled a lawsuit last week that could up-end the way real estate agents are paid, doing away with the traditional agent’s commission of 5-6%. That’s prompting a reckoning for buyers, sellers and real estate agents. Here are six things to know.
What if you already sold a house?
As part of the settlement, the National Association of Realtors agreed to pay $418 million over the next four years. That’s in addition to $210 million that various brokerage firms had already agreed to pay. Lawyers will get a chunk of that money, but the rest will go to people who sold their homes in recent years and paid what critics argue were inflated real estate commissions. Eligibility depends on where you live, but in some parts of the country, the settlement covers people who sold homes as much as a decade ago.
“We don’t know the exact number, but we estimate it to be in the neighborhood of 40 or 50 million” people, says Benjamin Brown, co-chair of the anti-trust practice at Cohen Milstein, one of the law firms involved in the class-action case.
For decades, the norm in this country has been for the person selling a home to pay both her own agent and the buyer’s agent. What’s more, the buyer’s share of that commission had to be spelled out in order to advertise the home on the big regional listing sites. Realtors insist they never fixed those commissions, but as a practical matter, the public notice worked to set a standard — often in the neighborhood of 5 or 6%, split between the seller’s agent and the buyer’s agent.
For a home priced at $400,000 — which is close to the national average — that works out to $20,000 to $24,000 in commissions — much higher than people in other countries typically pay. In Germany, commissions average 4.5%. In the UK, they’re under 2%.
Starting in July, sellers will no longer have to spell out a commission for the buyer’s agent. Advocates say that should lead to more negotiation, more competition and ultimately lower costs.
What increased negotiations mean for buyers and sellers?
There’s going to be more opportunity to shop around, and likely a wider array of services, from deluxe agents who charge a premium price to discount agents with more limited services — similar to what exists in other markets like stock brokers and travel agents.
Sellers may be able to negotiate a flat fee to market their house, not connected to the selling price. Buyers may be able to purchase a la carte services — paying less if they do their own house-hunting on the Internet and more if they want to be chauffeured around to open houses.
Many sellers may decide not to pay the buyer’s agent, leaving buyers to shoulder that cost on their own, or go without an agent altogether.
Overall expenses are expected to be significantly lower, however. Economists at the Federal Reserve Bank of Richmond estimate the changes could save homebuyers $30 billion a year, with most of those savings coming out of the pockets of real estate agents.
Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Md. on September 3, 2023. The new real estate commission structure could mean buyers have to pay more out-of-pocket fees starting in July.
Roberto Schmidt/AFP via Getty Images
Roberto Schmidt/AFP via Getty Images
What does this mean for agents?
Agents are still sorting out what this might mean for their business. When fees are more negotiable, agents will have to make the case for what they’re worth. But the best agents feel like they do that already.
“Do I think that Realtors have to learn to do business in a different way? Absolutely,” says Kevin Wilson, president of the Greater Nashville Realtors. “But I also think this is a wrinkle in the landscape. Not a landmine.”
A drop in commissions might drive some agents into other lines of work, but that’s not necessarily a bad thing. The U.S. has 2.5 to 3 million real estate agents — which is far more than any other country, relative to the size of its housing market. For example, the U.S. has about six times more home sales each year than the U.K. does, but 26 times more agents.
“Do we see agents that work with buyers start to phase out of the business because they’re just not getting as many clients?” asks Jovani Ortiz, an agent on Long Island. “These are sort of the unknowns that most agents are looking at right now.”
While the commission pie is likely to shrink, it may be cut into fewer slices, so the remaining agents might end up making the same amount of money.
With home prices and mortgage rates already high, how will homebuyers pay for their own agents?
While sellers have traditionally paid buyers’ agents in the U.S. (and built that expense into the sales price of their home), many sellers may opt not to pay buyers’ agents in the future. In that case, buyers will have to pay their own agent out of pocket, on top of a down payment and other closing costs. Finding thousands of dollars to pay an agent could be a challenge, especially for first-time buyers, who typically have limited funds and also the greatest need for an agent’s guidance. First-time buyers accounted for just 26% of existing home sales in February — tying a record low.
“Many first time buyers are already at the absolute max of what they’re able to borrow,” says Vanessa Perry, a professor at George Washington University School of Business and a fellow at the Urban Institute’s Housing Policy Finance Center. “They’re not going to be able to come up with any additional cash to pay their own agent.”
Home sellers could still agree through negotiation to pay the buyer’s agent. But in a hot housing market, sellers may have little incentive to do so. Eventually, buyers may be able to fold the cost of their agent’s commission into their mortgage, stretching the payments out over the life of the loan. But that will require a change in mortgage underwriting rules. Over time, lower real estate commissions should lead to somewhat lower housing prices.
What should people who are thinking of buying or selling in the next six months do?
The settlement’s changes in commission rules take effect in July, just as many people will be shopping for homes ahead of a new school year. But it’s not clear how quickly the landscape will change. Buyers and sellers may want to talk with their agent about the costs and benefits of moving before the deadline or waiting until the new rules are in place. Remember, commissions account for $20,000 to $24,000 on a typical home. Still, that’s just one factor to consider when deciding when to buy or sell — along with interest rates, the supply of homes on the market and life circumstances like a new job or family member.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
