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    More “for sale by owner” lawsuits estate agent commissions?

    Online Niel Posted on

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    Mary Anne Bryan is almost ready to sell the 3-bedroom brick Colonial where she raised her daughter in Chicago’s Beverly neighborhood. Bryan has spent a decade working as a real estate agent and is well aware of the recent changes in an industry she always thought could use some innovation, thanks to the processes surrounding buyers’ agent commissions.

    Bryan expects to handle some of the work of selling his own home. Saving what would probably be about a 2.5% commission to a listing agent would keep thousands of dollars in your pocket. But there are still some big unknowns.

    Most importantly, how will you know if a potential buyer is actually ready to make an offer? On the other hand, if that buyer works with a real estate agent, how much will that person expect to be paid?

    “How do you know if unrepresented buyers are pre-approved?” she said. “What is the process for that and how do you make sure you do it without discriminating against people? Even with all the knowledge I have, I’m afraid I might say or do something wrong.”

    Is the FSBO market booming?

    In 2023, a Missouri jury decided that the National Association of Realtors and some large real estate brokers conspired to keep commissions artificially high. As a result of this case, the new rules went into effect in August which changed the way commissions are set and communicated.

    Most media and industry attention focused what the changes in practice meant for buyersbut any homeowner thinking about selling also faces a whole new world. Coupled with Americans’ growing comfort with transacting even major purchases online and the knowledge that sellers have the upper hand in one of the tightest real estate markets in historya For Sale By Owner (FSBO) has never looked more tempting.

    “The FSBO market has changed significantly since the clearing requirement offering was removed from the MLS (Multiple Listing Service),” said Victor Lund, managing partner of WAV Group, a real estate consulting firm. “It’s the game.”

    The compensation requirement offer that changed starting in August was the commission paid to the real estate agent who represents a buyer. In the US real estate market, this amount has long been paid by the seller. Plaintiffs in the lawsuits settled in 2023 argued that it doesn’t make sense for people on one side of a settlement to pay to represent the other side.

    In addition, the old system often meant that a buyer’s agent could be paid more than the person representing the seller, because any seller who wanted to save money could ask their agent to accept less. Instead, buyers rarely thought about the transaction.

    In fact, while buyers’ agents often claim that their commission “has always been negotiable,” industry observers counter that many buyers had no idea how, let alone how much, their agent would be paid. Also, if any seller tried to offer less money to a buyer’s agent than was normal in a given market, many buyer’s brokers would turn their clients away from those properties.

    As the new rules took effect, removing the listing buyer’s broker compensation offer, industry participants expected the buying process to become more complicated. But as Bryan’s situation suggests, sellers can face just as many unknowns.

    How should you sell your home?

    Ena Koellish sees the new land as an opportunity.

    With her husband, Koellish started The K Group Real Estate in Radcliff, Kentucky, two years ago. Koellish says she was motivated by the opportunity to educate consumers about their options in what will likely be one of the biggest steps of their lives. But the more she read about the commission’s proceedings, the more surprised she was.

    “It blew my mind to find out how much unethical behavior there was in this industry,” Koellish said. While not all agents behave unethically, she pointed out, there is an inertia in the way things have traditionally been done in real estate that makes transactions opaque and difficult to understand for many consumers.

    Now Koellish makes videos that he posts online explaining the selling process to anyone who might consider it. She believes homeowners should still be able to order a “package” of all services offered by a listing agent — but should also have the option to pay for selected services individually, an “à la carte menu.” for a fee, if he takes over some of the sales duties.

    “My husband says we’re entering (the industry) at a good time,” Koellish told USA TODAY. “We learn good habits and correct processes. And we’re going to work, you know, ethically.”

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    A real estate “coach” rather than an agent?

    There have always been a handful of agents who offer limited seller services for a small fee, Lund noted, and for many savvy homeowners, especially those with professional real estate experience or those who have already been through the process many times, working with such a service can make sense.

    But he cautions potential sellers to be wary of assuming they can go it alone. “If you’ve ever done something as simple as sell an item on Facebook, you understand that the process is hard. It is painful. And that’s for a couch,” he said. “Real estate agents provide a legitimate service.”

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    In most cases, it’s what Lund calls “the background stuff”—knowing where to list a house, for example—that’s easy for professionals, but difficult, or even inaccessible, for amateurs. Most salespeople need at least one “coach,” he said.

    Some industry veterans see the same possibility Koellish does, on a larger scale. Brad Rice, who founded several mortgage and real estate companies, recently launched Homepie, an online marketplace that aims to connect buyers and sellers, with services to facilitate the transaction on both sides. Homepie is currently available in California and Florida, with ambitions to expand.

    Mary Anne Bryan can’t help but worry that many people will try to FSBO without really understanding the implications.

    “The biggest concern I have is that most people only do this a few times in their lifetime,” she said. “I believe the real estate profession is important and deserves to earn what it deserves to earn.”

    Still, she concluded, there are opportunities to make the system more efficient. “A la carte services may be the way to go,” she says.

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