ALBUQUERQUE, N.M. (April 17, 2024) -  A change in the way real estate agents get paid commissions has raised big questions about how it will impact the housing market.

It's all because the National Association of Realtors recently settled a historic class action lawsuit.

"It's changing how a potential compensation of commissions is communicated to a buyer's broker and a buyer. The other thing is it is requiring more transparency in where those commission dollars are coming from," said Morgan Cannaday, a real estate broker with Ida Kelly Realtors and the president of the Greater Albuquerque Association of Realtors.

Cannaday walked KOAT through the changes during a showing of her properties listed for sale.

"The more the media is covering this, the more the consumers are seeing this, the more questions they have about the process — whether now is a good time to sell or they should wait till July," said Cannaday.

The reason for the changes stems from a settlement.

A lawsuit argued that the National Association of Realtors violated antitrust laws in the way commissions for home sales were set and split between the selling and buying agents.

The settlement means buyers and sellers could soon be able to negotiate the fees to agents upfront.

On average those rates were between 5 and 6%.

One of the big changes you're going to see as a potential home buyer is if you don't negotiate the price of compensation upfront, realtors won't even let you step inside the home that you want to be shown.

"No one wants to work for free, I don't think that's anyone's intention by saying that. I think it's just a matter of you having this specific group of buyers that want representation, that are not willing to go through this process without representation, but they do not have the funds to compensate their own realtor. And by making that final statement that you are not willing to help assist with that, as a seller, you're reducing your potential buyer pool of people willing to make an offer on your home by a lot," said Cannaday.

Cannaday adds that this process just makes everything more transparent up front, but it comes with some downsides.

"I think the scariest part about this is it almost leads more first-time homebuyers to consider entering this process without representation. Because they don't want to have to pay for that themselves, especially lower income. VA Home Loans, for example, their loan restrictions, do not allow for a VA buyer to pay a commission," said Cannaday.

Cannaday stresses that realtors won't go away because of the changes, but says if this is your first time buying a home — or even a second or third — she says having a realtor there with you every step of the way is important.

The association says those commission rates have always been negotiable.

As part of the lawsuit, they will pay $418 million to settle broker commissions but admit no wrongdoing.

Source: "Changes in homebuying affecting Albuquerque market"