The Benefits of Lower Real Estate Commission Rates for Residential Real Estate Owners
As a residential real estate owner, you may be wondering how the recent settlement between the National Association of Realtors (NAR) and other real estate brokerages will affect you. The good news is that the settlement is expected to lead to a decrease in real estate commission rates, which can benefit you in several ways.
Who Stands to Gain the Most?
The clear beneficiaries of the settlement are residential real estate investors and owners. Why? Because they were the ones burdened with paying the so-called "standard" real estate commission ranging from 5% to 6%. With the expected decrease in commission rates, residential real estate owners will retain an additional 1% to 3% of their home equity when they sell.
The Benefits of Lower Commission Rates
For those who opt not to sell, there’s a boost in the value of their residential real estate holdings in their net worth calculations by 1% to 3%. This means that whatever your residential real estate holdings are estimated to be worth, multiplying them by 1% to 3% will give you an idea of how much more they are worth today.
Looking Forward
It’s conceivable that residential real estate owners could eventually see an increase in the value of their holdings by 5% to 6%. After all, across every industry, competition pressures commission rates down to 0%.
The Only Ones Who Don’t Benefit
Only one type of residential real estate investor may not benefit from the NAR settlement on price fixing: those who are unwilling to advocate for their wealth and negotiate down a listing agent’s commission. These investors might fall into categories such as being too affluent to be bothered, too apprehensive about confrontation, unaware of the ruling, or simply complacent with being taken advantage of.
Believe You Have the Ability to Negotiate a Better Deal
Those who are inclined to take action harbor a belief in the possibility of change. If you lack faith in your capabilities, you’ve already set yourself up for defeat. Here’s an example of how a defeatist mentality could cost you.
Residential Real Estate Buyers May Benefit Too
Even though homebuyers never paid a real estate commission, they could also potentially benefit from the real estate commission price fixing settlement too. With residential real estate owners now 1% to 3% richer, when they choose to sell, some owners may decide to share in some of their real estate commission savings gains with the buyer in the form of a credit at closing.
Example of a Buyer’s Agent Fee Schedule
Below is a proposed new home purchase fee structure introduced by a real estate agent I saw on Twitter. It shows what a buyer’s agent will do for a prospective homebuyer in a clear and concise manner.
Example of How Both Seller, Buyer, and Both Agents Win
Let’s examine a scenario where a listing agent charges a 2% commission to list and successfully sell a $500,000 house, highlighting the benefits for all parties involved.
Conclusion
The settlement between the NAR and other real estate brokerages is expected to lead to a decrease in real estate commission rates, which can benefit residential real estate owners in several ways. By understanding the benefits of lower commission rates, you can make informed decisions about your residential real estate investments and potentially increase your wealth.
FAQs
Q: Who stands to gain the most from the settlement?
A: Residential real estate investors and owners.
Q: How much will commission rates decrease?
A: Expected to decrease by 1% to 3%.
Q: Will homebuyers benefit from the settlement?
A: Yes, they may benefit from the real estate commission price fixing settlement too.
Q: How can I negotiate a better deal with my real estate agent?
A: Believe in your ability to negotiate and advocate for your wealth.
Q: Can I share in some of my real estate commission savings gains with the buyer?
A: Yes, some owners may decide to share in some of their real estate commission savings gains with the buyer in the form of a credit at closing.
Q: What is the proposed new home purchase fee structure?
A: A proposed fee structure introduced by a real estate agent, showing what a buyer’s agent will do for a prospective homebuyer in a clear and concise manner.
Q: How can I increase my wealth through residential real estate investments?
A: By understanding the benefits of lower commission rates and making informed decisions about your residential real estate investments.
Author: www.financialsamurai.com
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