Commission settlement, interest rates examined in housing market outlook
Story by Carol Pappas
There’s more to being a Realtor than opening a door and showing a home, and a settlement by the National Association of Realtors that took effect Aug. 17 is being viewed as a means of demonstrating just that.
The suit centered on the nondisclosure of a buyer’s agent commission when a house is sold. The commission for agents for the buyer and the seller was shared, averaging about a 6percent split. As part of the settlement, the commission for the buyer’s agent and the seller’s agent are no longer shared when a home is on the Multiple Listing Service
“This is not a bad thing,” said ERA King CEO Josh Wright. “It’s us being more transparent in dealing with the client.”
Basically, the seller’s price increased to cover the total commission, and it appeared the buyer’s agent was working for free.
Now Realtors disclose who is paying and how. “Commission was always negotiable, it’s just more transparent is all as an industry we’re doing,” Wright said. A real estate agent is not part of the contract. The agreement is between the buyer and seller, and the commission is part of that agreed upon price.
Since the requirements of the suit have gone into effect, “we haven’t seen much disruption,” he said. As the trainer for ERA’s sales force, he stresses that they need to understand their own value to the process and relate that to the client.
He pointed to the over 100 services Realtors provide to their clients. Some of the key services include property valuation, negotiating the contract, marketing the house – a sizable cost and undertaking – overseeing the inspection process to make sure it is done thoroughly and facilitating appraisals.
Wright, whose background is in finance, sees the outlook for the housing market in a positive light. The Federal Reserve cut interest rates by a half point in September, which will have a good impact on financial markets, but it’s not expected to impact mortgage rates significantly in the immediate future. A better indicator, he said, is the 10-year treasury bond. Mortgage rates follow that trend.
Over the next 12 months, he expects mortgage rates to slowly drop, probably into the 5.5 percent to 6.25percent range. In the fourth quarter of 2025 or into the first quarter of 2026, he anticipates mortgage rates to be in the high 4percent range.
Rates would need to get into the 5percent to 5.5percent range “before it starts booming again. It’s closer to a buyer’s market right now.” A buyer’s vs. seller’s market is determined by how long a house is on the market. When it’s less than six months, it’s a seller’s market.
“We’re closer to a buyer’s market,” Wright said. “We’re starting to see things getting more normal.”
During the COVID pandemic, new construction “went away,” he said. Now it’s coming back in significant ways. In St. Clair, much of the growth is due to large builders developing subdivisions with a high number of homes and having the ability to offer their own mortgage rates in the 5.5percent range.
It’s still good news, Wright reasoned. “Overall, it’s the sign of a healthy market and a great one for our local economy.”
