Real Estate Commission Changes Could Lower Missoula Home Prices

Missoula, MT (KGVO-AM News) - According to the National Association of Realtors, a recent national settlement over the current real estate commission structure could possibly help lower home prices.

I spoke with Brint Wahlberg, President of the Missoula Organization of Realtors who described the current method of buying and selling real estate through a broker.

Changes Coming on Real Estate Commissions

“The National Association of Realtors has reached a settlement and the result of a class action lawsuit as to how commissions can be shared by sellers and listing properties,” began Wahlberg. “The current practice that has been in place, at least in Montana since the early 90s, is that when a seller lists a home with a realtor and puts that property in the MLS (Multiple Listing Service), you are required to offer compensation to a buyer's agent. This settlement now says that requirement no longer is needed.”

Wahlberg said the changes will go into effect on Saturday, August 17^th.

The Changes will go Into Effect on August 17

“Starting August 17, a seller does not have to offer a buyer's agent compensation when they list their property. It is their choice. They still can. That's a conversation that they'll have with the individual brokers that list their properties with them. Right now we use the multiple listing service that currently displays buyer's agent commissions. That's going to go away, and then the other change in the practice is that a buyer's agent and a buyer must enter into an agreement before looking at houses, and that agreement needs to state what the buyer's agent is going to be compensated.”

Wahlberg said the first few months of the new policy might be what he termed ‘a little bumpy’.

The New Policy Might be 'a Little Bumpy' to Start

“We've been training our 800 or so licensed realtors that are members of our association,” he said. “We've been working on it statewide but sometimes your message can only go so far. So, it's a learning curve with such a systemic change in the way we practice organized real estate in Montana and in the United States. We're going to have some practitioners that will be learning some do's and don'ts as they go and like a lot of big changes, I think the first six months are going to be a little bumpy, but that's why we have our trade association, our multiple listing service, and other professionals that are working to continually educate and get the word out, and that’s what we’ll be doing here with the realtors.”

According to the Urban Institute, “Reducing fees will bring down home buying costs, but the deep shortage of homes will work in the opposite direction. As such, fee reductions will not substantially affect home affordability, so policymakers should continue focusing on increasing housing supply to make homeownership more attainable in the long run.”

If you’re planning to sell or purchase a home through a realtor, be sure to have your realtor fully explain the new rules on real estate commissions.

Click below to hear the entire conversation with Brint Wahlberg.