Significant Changes Loom Over How Homes are Bought and Sold in South Carolina
A historic lawsuit settlement has taken many by surprise in the housing market, significantly impacting the way homes are bought and sold in South Carolina. The National Association of Realtors (NAR) announced a $418 million settlement, potentially putting an end to the standard 6% sales commission, and bringing about changes to who pays these charges.
Industry insiders opine that the changes could complicate the home buying process. Perhaps, more worryingly, this could also limit the number of first-time homebuyers and minorities who can afford to buy homes in South Carolina.
NAR Suit Changes the Rules
The NAR had been practicing a policy which obligated home sale-listing brokers to provide an upfront compensation offer to a buyer’s listing agent, typically a 6% split between the seller’s broker and the buyer’s agent. Critics of the system have likened it to a cartel setup.
The recent settlement, if approved by a federal court, will eliminate the standard 6% commission, freeing sellers from the obligation of proposing compensation to prospective buyers and their agents, theoretically boosting negotiation and competition in certain markets.
Another key change proposed in the settlement is that homebuyers would have to sign an agreement with a broker before starting to work with one, to ensure homebuyers know what their agent will charge for services upfront. Changes from this dispute, initiated by a group of Missouri home sellers, are expected to be effective from mid-July, if the court grants final approval.
What Does This Mean for the South Carolina Housing Market?
The alterations mandated by the court will likely not affect all areas of the South Carolina housing sector. One such rule that wouldn’t affect the Palmetto State is the contract agreement requirement, as South Carolina has had a similar law for decades.
For Buyers
Many are speculating on the repercussions of putting an end to requiring a seller to disclose proposed compensation. The potential impacts include an additional cost for buyers, who will have to consider how much they can pay for representation if the seller doesn’t provide compensation. This could limit homebuyers to smaller price ranges or even restrict their ability to choose certain houses based on whether they can afford representation or not.
For Sellers
Sellers could also face changes, specifically sellers who choose not to offer a buyer agent commission might end up restricting those agents and their clients from making an offer on their property, thereby eliminating potential buyers.
For Real Estate Agents
Despite the concerning changes, industry veterans are optimistic. Some believe that this change will not result in a sharp drop in commissions, and that proficient agents will still receive their dues. The change will likely require buyers and sellers to approach things differently, but individuals will still want representation, ensuring that real estate professionals continue to be compensated.
The system changes are causing a ripple in the South Carolina housing market sector, and the full effect will only be clear once they come into action. Amid all the noise, one thing is clear- the landscape of home buying and selling in South Carolina is poised to see significant change in the near future.
