How a real estate industry shake-up could affect Idaho home buyers and sellers

IDAHO FALLS, Idaho (KIFI) - A big change could be coming to the national real estate industry potentially impacting the how homes are bought and sold.

Last year, the National Association of Realtors (NAR) reached a settlement after losing a lawsuit involving the commission structure through which buyers' agents receive their pay.

If this new settlement is approved by a federal court, here's how things could change for people looking to buy or sell a home in Idaho.

The NAR's current system

Under the current system, buyer agents can search through a list of homes for sale through the NAR's multiple listing service (MLS).

It's an online database that shows them the seller's information, the home price, and most controversially, how much the buyer's agent's commission is. According to Associate Broker Jessica Cardon of the Murdock Manwaring Company, this actually does have some benefits.

"We incentivize to say, 'Hey, if you bring a buyer, I'm willing to share as the listing agent,'" Cardon said. "The listing agent is taking a portion of the commission that they've negotiated with the seller and giving it to the cooperating broker."

Cardon tells us realtors use this method as a marketing tool towards potential buyers and agents to drive more attention to a home for sale.

What could change

Here's where critics of the current system are concerned: the current system could motivate a buyers' agent to only show a client homes with high commissions.

If the new settlement is approved, buyer's commissions would be removed from the MLS and buyers' agents would be required to walk potential clients though a Buyer Representation Agreement. Through which, they'd negotiate how much an agent would be paid before ever showing a client a listing.

"You just look at the house," Cardon said. "You won't know what the compensation is. And now the buyer must have compensation in place for their agent. But now it's not tied to the homes."

Critics of the settlement have said the new system could cause realtors to either lose their jobs or leave the industry. They also say the settlement could make home prices go up even further.

Realtors from the Murdock Manwaring Company have said the majority of the online chatter surrounding the settlement is fear-mongering.

"We're still going to have buyers, still going to have sellers," Cardon said. "This will not change how they work and they like to buy and sell houses. But it may change for agent. An agent (who) does not want to adapt to the new changes and may choose that, this isn't for them anymore."

According to the Murdock Manwaring Company, Idaho realtors might actually be ahead of the curve if these changes are put into place.

That's because under the rules of the Idaho Realtors Association, buyer's agents are already required to give an agency disclosure when they meet someone looking to buy a home.

In this meeting, the realtor gives that person the option to sign a representation agreement, negotiate commission, and become a client. The other option is to remain a customer, where they can still work with the realtor, but the agent's compensation will be decided later.

For more information on the changes coming to the real estate industry, click HERE.