A new landmark court settlement changing how real estate brokers and agents are paid is leading to a lot of confusion and concern across the country.
Right now, if approved by the courts, the settlement means a buyer can now negotiate their agent's commission. Experts said it is likely to mean lower housing prices, but also could mean far fewer agents.
Real estate company Keller Williams is trying to clear the muddy waters from the settlement agreement by the National Association of Realtors and held a webinar this week.
The webinar was broadcasted to thousands of agents across the country with the goal of helping them better understand the new rules that could take effect in July if approved by the courts.
Get a weekly recap of the latest San Francisco Bay Area housing news. Sign up for NBC Bay Area’s Housing Deconstructed newsletter.
"It's just wanting a clear understanding, said Hilda Ramirez, CEO of Keller Williams Silicon City. "No one likes working in an unknown."
Ramirez said despite the perception that agent's commission rate was a set percentage, everything has always been negotiable. But before, the seller usually paid the commission of the buyer's agent, or a portion of it.
Under the proposed court settlement, the buyer has to pay their agent. The seller under the agreement has more power to negotiate the commission before they sign on with the agent.
"It will require a little more negotiations on behalf of the seller and the buyer's agent to understand the new business practice that will be adopted most likely," Ramirez said.
In that negotiation, the seller can still offer to pay part of the commission in order to speed up or lock in the transaction.
"I don't know how feasible that is for the amount of agents in that industry," said Larry Giang, who attended Monday's Keller Williams webinar to get some questions answered.
Giang worries the new rules will dissuade many agents from representing buyers.
"I think it will make a lot of people that want get into real estate, especially the new ones, a lot of them will have a harder time to survive and thrive," Giang said.
Giang said even some veterans might throw in the towel.
What also worries the industry is the cost to buyers. Their agent's commission can't be included as part of the bank loan, so they will have to pay out of pocket. This means if they want to put 20% down, they might need 23% to cover the agent's commission if that is a rate they agreed on.
"Everything has been working fine for so long and now this is brought up making it a big issue, and it shouldn't be," Giang said.
The webinar encouraged agents to demonstrate their value to buyers to be extra transparent, and to not be discouraged by the changing of the rules.
