If you’re thinking about buying a home this year, you might be wondering if it makes sense to wait until after the recent commission lawsuit settlement takes effect in order to save money.
It’s completely understandable considering how the media and politicians make it sound like buyers are about to save a lot of money when purchasing a home due to the terms of the settlement.
But before you put off your home search, here are a 5 things you should consider so you make the most thoughtful and informed decision possible:
1) You Could Miss out on the Perfect House
While houses are at least partially built from trees, they don’t grow on trees. There’s been a shortage of houses on the market for quite some time, and that doesn’t look to be changing anytime soon. If you see a house you like, you might be better off buying it than waiting until the settlement takes effect, especially if some buyers do decide to take a wait and see approach, cutting down on your competition.
2) It Could Take Longer Than You Think
The National Association of REALTORS® proposed a settlement to take effect in July 2024, but it isn’t entirely approved yet. According to this CNBC article, due to the fact that this involves a federal class-action lawsuit, the court and any interested parties will be given time to review the settlement and offer commentary and feedback on the agreement, making the end of the year a more realistic timeframe for it to take effect.
3) Representing Yourself Might Not Actually Save You Any Money
Some buyers think that by not using an agent they’ll be able to simply deduct however much a buyers’ agent commission was off of their purchase price. However, sellers aren’t necessarily going to accept less than similar houses have recently sold for, since they’ll be basing their expectation off of recent market data.
It isn’t as simple as finding a house you like and making an offer. Saving money by forgoing the help of a buyers’ agent will require truly understanding what the market value of the home you’re attempting to purchase is, and successfully negotiating the best possible price for it against a skilled listing agent who is representing their clients’ best interests, not yours.
So, even if you wait until the changes take effect, you could easily lose as much money as you’re trying to save (or more) by not knowing values well enough, or not negotiating as well as an agent would on your behalf.
4) Buyers’ Agents Might Not Charge Less for Their Services
Another aspect of the proposed settlement is that you’ll certainly still be able to hire and work with a buyers’ agent and negotiate their commission rate. But that doesn’t mean every agent will be willing or able to work for a much lower commission than they’ve been working for in the past.
Agents work long and hard for each of their buyers, and probably don’t make anywhere near as much money as you think they do. Of course you can always shop around and try to find an agent who will work for lower rates than other agents, but as is the case in any industry, sometimes going with the lowest cost option ends up costing you more in the end.
5) You Might Have Trouble Successfully Buying a House at All
If the whole point of waiting for the settlement to take effect is to save money, keep in mind that in order for savings to be achieved, you’ll need to successfully purchase a home. Competition has been fierce between buyers in many areas and price ranges, and doesn’t show signs of letting up — so be prepared to compete in bidding wars against other buyers who have agents helping them craft their offers and negotiating on their behalf.
It’s difficult for buyers with an amazing agent representing them to get their offer accepted, so don’t underestimate how tough it’ll be going the DIY route.