March 15, 2024, will be a day long remembered in the real estate industry. That is the day it was announced that the National Association of Realtors (NAR) settled a federal antitrust lawsuit that will undoubtedly reshape the compensation structure for agents as a result.

Moving forward, sellers will no longer have to pay the buyer agent’s commission, which is typically half of the standard 5 to 6% commission of the home’s sale price. You don’t need to look far to see all of the big news outlets running articles with “the end of 6%” headlines.

So obviously this is causing home sellers to rethink the whole compensation model, also questioning whether it’s fair to pay a listing agent 2 to 3% of the sale price, regardless of factors like the home’s value and how hard or easy it would be to sell.

Think about it logically…Does it cost twice as much and take twice as much time and resources for an agent to sell an $800,000 home as opposed to a $400,000 home? Of course not. But under a percentage compensation model, the agent who sells a home for $800,000 gets paid twice as much as if they sold a $400,000 home. Is it double the work for double the paycheck? Nope.

But because the status quo has dictated that agents get paid a commission based on the sale price of the home for the last century, it has never been legally challenged by home sellers (until now, of course).

On the flipside of the coin, it’s important to remember that under the current commission based model agents are disadvantaged as well. An agent can spend months marketing a property and invest a lot of time and money in the process, only to have unreasonable sellers change their minds and decide not to sell, in which case the agent earns nothing. So it’s a big risk, big reward game.

So now many in the industry are reconsidering whether it would be better for buyers and sellers to pay agents an hourly fee, or a flat fee, or fees that scale up or down based on the price of the home or how difficult it might be to sell a certain property. The industry is looking for a compensation model that accurately reflects the current state of the market. 

We found a company called just990 (just990.com) based out of Phoenix, Arizona, that is taking an innovative approach. Basically, home sellers can list with an experienced agent who offers “full service”, but also allows the home seller to find their own buyer and pay just $990 to have the agent negotiate the deal and see it through to closing. 

If the agent finds the buyer, which is probably the most likely case the majority of the time, the company still charges only 2% to sell the home, which is obviously less than the typical 3%. And remember, sellers no longer need to feel pressured or obligated to pay the buyer agent on the other side, so current and future home sellers rejoice!

Will flat fee real estate companies gobble up market share and become the future juggernauts of the industry in the wake of this landmark court case decision? Only time will tell, but one thing is clear – home sellers are adopting a new frame of mind and the prevailing philosophy seems to echo the words of the ancient Greek tragedian, Euripides, who said, “question everything”.